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Filed Pursuant to 424(b)(3)
File No. 333-35400
PROSPECTUS
Titan Motorcycle Co. of America
2,502,500 Common Shares
This prospectus relates to shares of our common stock that may be sold
by the selling stockholders named under the section of this prospectus entitled
"Selling Stockholders." The selling stockholders may sell some or all of the
common stock through ordinary brokerage transactions, directly to market makers
of our shares, or through any of the other means described in the section
entitled "Plan of Distribution" beginning on page 12.
The selling stockholders will receive all of the proceeds from the sale
of the common stock, less any brokerage or other expenses of sale incurred by
them. We are paying for the costs of registering the shares covered by this
prospectus.
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "TMOT." The closing sales price of our common stock as reported by the
Nasdaq SmallCap Market on April 18, 2000 was $1.50 per share.
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BEFORE PURCHASING ANY OF THE SHARES COVERED BY THIS PROSPECTUS, CAREFULLY READ
AND CONSIDER THE RISK FACTORS INCLUDED IN THE SECTION ENTITLED "RISK FACTORS"
BEGINNING ON PAGE 1. YOU SHOULD BE PREPARED TO ACCEPT ANY AND ALL OF THE RISKS
ASSOCIATED WITH PURCHASING THE SHARES, INCLUDING A LOSS OF ALL OF YOUR
INVESTMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE SALE OF THE COMMON STOCK OR DETERMINED THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS ILLEGAL FOR ANY
PERSON TO TELL YOU OTHERWISE.
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The date of this prospectus is May 8, 2000.
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TABLE OF CONTENTS
Page
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TITAN MOTORCYCLE CO. OF AMERICA.................................................................................. 1
RISK FACTORS..................................................................................................... 1
FORWARD LOOKING STATEMENTS....................................................................................... 6
USE OF PROCEEDS.................................................................................................. 8
SELLING STOCKHOLDERS............................................................................................. 8
DESCRIPTION OF SECURITIES........................................................................................ 9
PLAN OF DISTRIBUTION............................................................................................. 12
LEGAL OPINIONS................................................................................................... 13
EXPERTS.......................................................................................................... 13
WHERE YOU CAN FIND MORE INFORMATION.............................................................................. 13
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. NO ONE HAS
BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE COMMON STOCK IS NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS NOT
PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE
DOCUMENTS.
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TITAN MOTORCYCLE CO. OF AMERICA
We design and manufacture high-end customized heavyweight motorcycles.
We build both highly customized, individually assembled motorcycles and
high-end, assembly-line produced motorcycles. A heavyweight motorcycle is a
motorcycle with an engine size or displacement of 651 cubic centimeters or
greater. Our products are distributed through a network of 61 domestic dealers
and 20 foreign dealers.
We currently maintain three product lines.
PREMIUM MOTORCYCLES: We manufacture seven premium models with a package
of over 200 custom options. Customers design their motorcycles by choosing
colors, paint design, finish, fenders and various performance and aesthetic
enhancements. Premium models are typically constructed and delivered in six to
ten weeks from the order date. Our premium models represented approximately 75%
of our fiscal year 1999 revenues. The average retail selling price for our
premium models is approximately $35,000.
"PHOENIX BY TITAN" MOTORCYCLES: Our "Phoenix by Titan" line of
motorcycles was introduced in March 1999. We manufacture four "Phoenix by Titan"
models with six standard customization packages available through our
dealerships. Our Phoenix models represented approximately 23% of our fiscal year
1999 revenues The average retail selling price for the "Phoenix by Titan" models
is approximately $20,000 to $25,000.
APPAREL AND ACCESSORIES: We have recently developed a line of Titan
apparel and accessories. We are also developing a premium line of upgrade parts
which are compatible with Titan and other "V Twin" motorcycles.
We are a Nevada corporation, formed on January 10, 1995. Our principal
executive offices are located at 2222 West Peoria Avenue, Phoenix, Arizona and
our telephone number is (602) 861-6977.
RISK FACTORS
BEFORE PURCHASING ANY OF THE SHARES COVERED BY THIS PROSPECTUS, YOU SHOULD
CAREFULLY READ AND CONSIDER THE RISK FACTORS SET FORTH BELOW. YOU SHOULD BE
PREPARED TO ACCEPT ANY AND ALL OF THE RISKS ASSOCIATED WITH PURCHASING THE
SHARES, INCLUDING A LOSS OF ALL OF YOUR INVESTMENT.
WE HAVE A HISTORY OF LOSSES AND WE MAY LOSE MONEY IN THE FUTURE
Although we earned $237,479 in net income for the fiscal year 1998, we
incurred losses of $257,463 in fiscal year 1995, $95,496 in fiscal year 1996 and
$1.7 million in 1997. In the fiscal year 1999 we incurred losses of $8,060,282.
We expect to incur further losses in the first quarter of 2000 and may continue
to incur losses thereafter. Given our history of losses, we cannot assure you
that we will ever be profitable.
WE MAY BE UNABLE TO REGAIN PROFITABILITY IF WE DO NOT GENERATE AN INCREASE IN
CONSUMER DEMAND FOR OUR PRODUCTS
To regain profitability, we need to generate an increased level of
market acceptance for our products. Our success depends on our ability to meet
the following objectives, none of which we may achieve:
- increase consumer awareness of our products;
- establish a reputation for high quality;
- increase sales through our independent third party dealers;
and
- expand our dealer network.
We cannot assure you that we will meet these objectives.
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COMPLICATIONS IN THE ESTABLISHMENT AND INTEGRATION OF OUR NEW "PHOENIX BY TITAN"
LINE OF MOTORCYCLES COULD MATERIALLY ADVERSELY AFFECT OUR EXPENSES, GROSS
MARGINS AND OPERATING RESULTS
We recently introduced our "Phoenix by Titan" line of heavyweight
motorcycles. Unlike our custom motorcycles, we manufacture these motorcycles in
four models through an assembly line process. Six standard customization
packages are available through the dealerships for each of the four models.
While initial orders have been substantial, there can be no assurance that we
will be able to accomplish the following goals:
- effectively manage any start up difficulties that we may experience;
- successfully adapt to an assembly line manufacturing process; and
- gain or maintain consumer acceptance of this product line.
Also, we cannot assure you that this line, which is less expensive,
will not take sales away from our higher end custom motorcycles or that we will
not face other difficulties in introducing this line. Any of these issues could
materially adversely affect our expenses, gross margins and operating results.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO SUCCESSFULLY IMPLEMENT OUR NEW
MANAGEMENT INFORMATION SYSTEM WHICH COULD RESULT IN A DISRUPTION OF OUR BUSINESS
AND COULD HAVE A NEGATIVE AFFECT ON OUR OPERATIONS
We recently installed a new management information system. This system
will monitor our inventory, production, billing and other operational aspects of
our business. We cannot assure you that we will be able to successfully operate
and utilize this new system which could result in a disruption of our business
and could have a negative affect on our operations.
WE SELL A DISCRETIONARY PRODUCT AND A DOWNTURN IN THE ECONOMY COULD NEGATIVELY
AFFECT OUR GROWTH AND PROFITABILITY
Motorcycles in the high-end customized heavyweight market are
discretionary purchase items. A recession or economic downturn may reduce
consumer spending and negatively affect our growth and profitability. An
economic downturn could result from a number of factors outside of our control,
including:
- employment levels;
- business conditions;
- interest rates;
- inflation levels; and
- taxation rates.
COMPETITION IN OUR MARKET HAS INCREASED SUBSTANTIALLY AND MAY RESULT IN PRICE
REDUCTIONS, REDUCED GROSS MARGINS AND A LOSS OF OUR MARKET SHARE
While we operate in the high-end segment of the heavyweight cruiser
market, the overall heavyweight cruiser market has recently experienced a
substantial increase in production capacity and new entrants. Some of our
competitors have technical, production, personnel and financial resources that
exceed ours and we cannot assure you that the competition will not materially
adversely affect our business, financial condition or results of operations. The
increased competition could result in price reductions, reduced gross margins
and a loss in our market share.
Major competitors in the heavyweight cruiser market are:
- Harley-Davidson(TM), the heavyweight cruiser market leader,
which is reportedly increasing its capacity to over 160,000
units from approximately 148,000 units;
- BMW which entered the segment in 1997 with their "R1200C" model;
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- Excelsior-Henderson, which recently entered the market with their
"Super X" model; and
- Polaris, which recently entered the market with their "Victory V92C"
model.
OUR PRODUCTS COULD CONTAIN DEFECTS CREATING PRODUCT RECALLS AND WARRANTY CLAIMS
WHICH COULD MATERIALLY ADVERSELY AFFECT OUR FUTURE SALES AND PROFITABILITY
Our products could contain unforeseen defects. These defects could
create product recalls or warranty claims that could increase our costs and
affect profitability. Significant and continuous defects could negatively impact
the goodwill and quality associated with our name. Defects could also give rise
to litigation which could result in our liability for judgments which could have
a significant impact on our business, operations and financial condition.
Product recalls resulting from unforeseen defects could subject us to a
significant financial commitment and have a significant impact on our business,
operations and financial condition.
WE ARE SUBJECT TO CONTINGENT LIABILITIES UNDER A DEALER FLOOR PLAN FINANCING
PROGRAM WHICH COULD EXPOSE US TO SIGNIFICANT FINANCIAL OBLIGATIONS
Approximately 51 of our dealers receive floor plan financing for our
products through TransAmerica Commercial Finance Corporation, Deutsche Financial
Services or Bombardier Financial. The dealers are the obligors under these floor
plan agreements and are responsible for all principal and interest payments.
However, we are subject to a standard repurchase agreement which requires us to
buy back any of our motorcycles at the wholesale price if the dealer defaults
and the motorcycles are repossessed by one of these floor plan providers. While
we have only had to repurchase less than $700,000 worth of our motorcycles since
August of 1997, as of February 29, 2000, total outstanding obligations of all 51
dealers was approximately $13,800,000. Our profitability would be significantly
negatively impacted if we were forced to repurchase a large number of these
motorcycles.
WE MAY NOT BE ABLE TO RAISE THE ADDITIONAL CAPITAL REQUIRED TO EXECUTE OUR
BUSINESS PLAN
We expect to continue to incur significant capital expenses in
continuing to expand our production lines, introduce new product lines and
increase unit capacity. Additional financing may not be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to execute our business plan
or take advantage of our business opportunities. In addition, if we elect to
raise capital by issuing additional shares of stock, existing stockholders may
incur dilution.
A LARGE PORTION OF OUR REVENUE COMES FROM A SMALL NUMBER OF CUSTOMERS, THE LOSS
OF WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR OPERATING RESULTS
Francis S. Keery, our Chief Executive Officer, and Patrick Keery, our
President, each own 33% of BPF Holdings, LLC, which currently owns four
motorcycle retail stores which are Titan dealers and carry our products. The
four stores are: Titan of Phoenix, Titan of Los Angeles, Titan of Las Vegas and,
most recently, Titan of Houston. In 1999, approximately 23.3% of the Company's
sales were to BPF-owned stores. The loss of the BPF dealerships would have a
material adverse affect on our operating results.
WE DEPEND HEAVILY ON THIRD PARTY PARTS SUPPLIERS AND ANY SIGNIFICANT ADVERSE
VARIATION IN QUANTITY, QUALITY OR COST WOULD NEGATIVELY AFFECT OUR OPERATIONS
We operate primarily as an assembler and rely heavily on a number of
major component manufacturers to supply us with almost all of our parts. Any
significant adverse variation in quantity, quality or cost would adversely
affect our volume and cost of production until we could identify alternative
sources of supply.
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WE DEPEND ON FOREIGN VENDORS FOR CERTAIN COMPONENT PARTS WHICH EXPOSES US TO
RISKS THAT COULD MATERIALLY AND ADVERSELY AFFECT OUR OPERATING RESULTS
We depend on foreign vendors for certain component parts which exposes
us to additional risks. Our reliance on foreign vendors exposes us to risks such
as:
- currency fluctuations which may adversely affect the value of goods
purchased;
- trade restrictions;
- changes in tariffs; and
- difficulties in enforcing supply arrangements.
The occurrence of any of these risks could materially and adversely
affect our operating results.
WE DEPEND HEAVILY ON INDEPENDENT THIRD PARTY DEALERS AND OUR RESULTS OF
OPERATIONS COULD BE NEGATIVELY IMPACTED IF THE DEALERS FAIL TO ADEQUATELY
PROMOTE OUR PRODUCTS, IMAGE AND NAME
Failures by independent third party dealers to adequately promote our
products could negatively affect our results of operations. Our products are
sold primarily through independent dealers. As a result, we are unable to fully
control the presentation, delivery and service of our products to the final
customer. We depend heavily on our dealers' willingness and ability to promote
our products, image and name.
OUR GROWTH DEPENDS ON OUR ABILITY TO EXPAND OUR DISTRIBUTION NETWORK AND SUPPORT
DEALERS AND WE CANNOT ASSURE YOU THAT THIS STRATEGY WILL BE SUCCESSFUL
We plan to expand our dealer network to implement our growth strategy.
We cannot assure you that we will be able to attract additional dealers or that
these dealers will be successful in selling our products.
We plan to support our dealers in the following ways:
- facilitating floor plan financing and incentives;
- providing continuing education about our products;
- supplying parts and accessories; and
- providing training to sales and service personnel.
Any difficulties in the continued execution of this plan may cause us
to lose dealers or experience difficulties in attracting new dealers and could
cause the distribution of our products to be adversely affected.
WE ARE ATTEMPTING TO ESTABLISH SALES OPERATIONS IN FOREIGN MARKETS WHICH
REQUIRES SIGNIFICANT MANAGEMENT ATTENTION AND FINANCIAL RESOURCES AND THIS
STRATEGY MAY NOT BE SUCCESSFUL
We are attempting to establish sales operations in foreign markets, and
we cannot assure you that we will be able to successfully manage the inherent
risks and complications associated with operating in foreign markets.
These risks and complications of operating in foreign markets include the
following:
- selecting and monitoring dealers;
- establishing effective dealer training;
- transporting inventory;
- parts availability;
- changes in diplomatic and trade relationships;
- tariffs;
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- currency exchange rate; and
- unexpected changes in regulatory requirements.
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO KEEP OUR SENIOR EXECUTIVE OFFICERS
AND KEY EMPLOYEES
We rely considerably on the abilities of Francis S. Keery, our Chairman
and Chief Executive Officer and Patrick Keery, our President. We also depend to
a significant extent upon the performance of our executive management team. The
unavailability or loss of services of any of these individuals, or the failure
to attract and retain qualified personnel to replace them, could have a material
adverse affect on our business. We only have a non-competition agreement with
our Chief Financial Officer and we cannot assure you that his agreement will be
enforceable or effective in retaining him. Also, we cannot assure you that our
other executive officers will not leave us.
OUR FINANCIAL CONDITION AND OUR ABILITY TO FULLY IMPLEMENT OUR EXPANSION PLANS
COULD BE NEGATIVELY IMPACTED IF WE FAIL TO EFFECTIVELY MANAGE OUR GROWTH
Our rapid growth has placed, and is expected to continue to place, a
significant strain on our managerial and operational resources. Our failure to
effectively manage our growth could negatively impact our operations. Our
ability to support future growth will depend on our ability to find qualified
employees and suitable expansion space for our manufacturing operations and
improving our managerial and production capabilities. We cannot assure you that
we will be able to continue to manage future growth successfully.
WE ARE SUBJECT TO VARIOUS ENVIRONMENTAL REGULATIONS AND OUR FAILURE TO COMPLY
COULD NEGATIVELY IMPACT OUR OPERATIONS
We are subject to various federal, state and local environmental
regulations. Our failure to comply with these regulations could result in any
one or more of the following:
- restrictions on our ability to expand or modify our current
operations or facilities;
- significant expenditures in achieving compliance with the
regulations;
- significant liabilities exceeding our available resources; and
- cessation of our operations.
Our business and assets could be materially adversely affected if
environmental regulations require that we modify our facilities or otherwise
limit our ability to conduct our operations. Any significant expenses incurred
as a result of environmental liabilities could have a material adverse affect on
our business, operating results and financial condition.
OUR FAILURE TO COMPLY WITH VARIOUS REGULATORY APPROVALS AND GOVERNMENTAL
REGULATIONS COULD NEGATIVELY IMPACT OUR OPERATIONS
Our motorcycles must comply with certain governmental approvals and
certifications regarding noise, emissions and safety characteristics. Our
failure to comply with these requirements could prevent us or delay us from
selling our products which would have a significant negative impact on our
operations.
OUR QUARTERLY RESULTS MAY FLUCTUATE SIGNIFICANTLY WHICH MAY RESULT IN THE
VOLATILITY OF OUR STOCK PRICE
Our quarterly operating results may fluctuate significantly as a result
of a variety of factors, many of which are outside of our control. These factors
include:
- manufacturing delays;
- the amount and timing of orders from dealers;
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- disruptions in the supply of key components and parts;
- seasonal variations in the sale of our products; and
- general economic conditions.
WE COULD BE REQUIRED TO REDEEM OUR SERIES A AND SERIES B CONVERTIBLE PREFERRED
STOCK AT A PREMIUM WHICH WOULD REQUIRE A LARGE EXPENDITURE OF CAPITAL AND COULD
HAVE A MATERIAL ADVERSE AFFECT ON OUR FINANCIAL CONDITION
The holders of our Series A and Series B Convertible Preferred Stock
have the right to force us to redeem their Preferred Stock at a premium upon the
occurrence of certain events. The redemption of our Series A or Series B
Convertible Preferred Stock would require a large expenditure of capital and we
may not have sufficient funds to satisfy the redemption. In addition, you could
face further dilution of your ownership percentage as a result of a decline in
the market price of our common stock which would result in an increase in the
number of shares of common stock issuable upon conversion of the Series A or
Series B Convertible Preferred Stock, or in the event of certain defaults under
the Series A or Series B Preferred Stock, which could result in a dilution
adjustment. Any such event could adversely affect the price of our stock and
ability to raise additional capital.
WE MAY ISSUE ADDITIONAL STOCK AND DILUTE YOUR OWNERSHIP PERCENTAGE
Certain events over which you have no control could result in the
issuance of additional shares of our common stock, which would dilute your
ownership percentage. We may issue additional shares of common stock or
preferred stock:
- to raise additional capital or finance acquisitions;
- upon the exercise or conversion of outstanding options, warrants and
shares of convertible preferred stock; or
- in lieu of cash payment of dividends.
There are currently outstanding convertible preferred stock, warrants,
and options to acquire up to 8,810,867 additional shares of common stock. If
converted or exercised, these securities will dilute your percentage ownership
of common stock. These securities, unlike common stock, provide for antidilution
protection upon the occurrence of stock dividends, combinations, capital
reorganizations and other events. If one or more of these events occurs, the
number of shares of common stock that may be acquired upon conversion or
exercise would increase.
OUR GOVERNING DOCUMENTS AND NEVADA LAW CONTAIN PROVISIONS THAT COULD PREVENT
TRANSACTIONS IN WHICH YOU WOULD RECEIVE A PREMIUM FOR YOUR STOCK
Our Articles of Incorporation and the Nevada Revised Statutes contain
provisions that could have the affect of delaying, deferring, or preventing a
change in control and the opportunity to sell your shares at a premium over
current market prices. Although these provisions are intended to protect us and
our stockholders from unwanted takeovers, their effect could hinder or prevent
transactions in which you might otherwise receive a premium for your common
stock over then-current market prices, and may limit your ability to approve
transactions which may be in your best interests. As a result, the mere
existence of these provisions could adversely affect the price of our common
stock.
FORWARD LOOKING STATEMENTS
This prospectus contains or incorporates forward-looking statements
including statements regarding, among other items, our business strategy, growth
strategy, and anticipated trends in our business. We may make additional written
or oral forward-looking statements from time to time in filings with the
Securities and Exchange Commission or otherwise. When we use the words
"believe," "expect," "anticipate," "project" and similar expressions, this
should alert you that this is a forward-looking statement. Forward-looking
statements speak only as of the date the statement is made. These
forward-looking statements are based largely on our expectations. They
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are subject to a number of risks and uncertainties, some of which cannot be
predicted or quantified and are beyond our control. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward-looking statements. Statements in this prospectus, and in
documents incorporated into this prospectus, including those set forth in "Risk
Factors" describe factors, among others, that could contribute to or cause these
differences. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this prospectus will
in fact transpire or prove to be accurate. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by this section.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of any shares offered by
this prospectus.
SELLING STOCKHOLDERS
The following table provides information about the selling
stockholders. The shares offered by this prospectus will be offered from time to
time by the selling stockholders named below, or by pledgees, donees,
transferees or other successors in interest to them.
The shares shown as offered by Advantage Fund II Ltd. and Koch
Investment Group Limited under this prospectus may be issued upon conversion of
Series B Convertible Preferred Stock and exercise of warrants acquired by these
selling stockholders from us in a private placement on March 9, 2000. Under the
terms of the Series B Convertible Preferred Stock and the warrants, no selling
stockholder can convert Series B Convertible Preferred Stock or exercise
warrants to the extent such conversion or exercise would cause the selling
stockholder's beneficial ownership of our common stock (excluding shares
underlying unconverted Series B Convertible Preferred Stock and unexercised
warrants) to exceed 4.9% of the outstanding shares of common stock.
SHARES OWNED
AFTER OFFERING PERCENTAGE OF
MAXIMUM NUMBER OF (ASSUMING ALL COMMON STOCK
NAME OF SELLING SHARES OWNED SHARES TO BE SOLD SHARES OFFERED OWNED AFTER
STOCKHOLDERS PRIOR TO THE OFFERING(1) IN THE OFFERING ARE SOLD) OFFERING
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Advantage Fund II Ltd. 2,669,124(1) 1,867,500(2)(3) 1,521,623 8.8%
Koch Investment Group 893,456(1) 622,500(2)(4) 510,965 3%
Limited
Robert K. Schacter 8,550 8,550 0 0%
Thomas J. Griesel 2,135 2,135 0 0%
Richard Cohn 3,690 1,190 0 0%
Financial West Group 625 625 0 0%
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(1) Represents the number of shares held directly plus the number of
shares issuable upon the conversion of Series A Convertible
Preferred Stock at the initial fixed conversion price of $2.6812,
including conversion of two years of accrued dividends thereon,
the conversion of Series B Convertible Preferred Stock at the
initial fixed conversion price of $1.75, including conversion of
two years of accrued dividends thereon, and exercise of warrants
issued in connection with the Series A and Series B Convertible
Preferred Stock. The shares issuable upon conversion of the Series
A Convertible Preferred Stock and the Series A warrants were
previously registered for resale under the Securities Act on
Registration Statement No. 333-89171. The Series A Convertible
Preferred Stock and the Series A warrants contain a 4.9%
beneficial ownership limitation similar to that of the Series B
Convertible Preferred Stock and the Series B warrants described
above.
(2) In accordance with the Registration Rights Agreements between us
and these selling stockholders, the number of shares shown as
offered by this prospectus represents 175% of the number of shares
issuable upon conversion of the Series B Convertible Preferred
Stock as described in note (1) plus the shares issuable upon
exercise of the Series B warrants.
(3) Genesee International, Inc., the investment manager of Advantage
Fund II Ltd., may be deemed to beneficially own the shares
offered by Advantage through its shared dispositive and voting
power over such shares. Mr. Donald R. Morken, the controlling
stockholder of Genesee International, may be deemed to control
the exercise by Genesee International of such shared
dispositive and voting power over such shares.
(4) Koch Industries, Inc., the indirect parent company of Koch
Investment Group Limited, may be deemed to beneficially own the
shares offered by Koch Investment Group Limited through its shared
dispositive and voting power over such shares. Messrs. Charles
Koch and David Koch, the majority stockholders of Koch Industries,
may be deemed to control the exercise by Koch Industries of such
shared dispositive and voting power over such shares.
As of the date of this prospectus, the selling stockholders do not hold
any other securities in Titan other than the shares being offered under this
prospectus, the Series A Convertible Preferred Stock, the Series B Convertible
Preferred Stock and the warrants described above. None of the selling
stockholders has had any material relationship with us within the past three
years.
DESCRIPTION OF SECURITIES
We are authorized to issue up to 90,000,000 shares of common stock and
10,000,000 shares of preferred stock. As of April 19, 2000, 17,181,187 shares of
common stock were issued and outstanding. Additionally, as of April 19, 2000, we
have outstanding options to purchase 1,285,000 shares of our common stock,
warrants to purchase 660,467 of our common stock, 3,973 shares of our Series A
Convertible Preferred Stock and 2,000 shares of our Series B Convertible
Preferred Stock.
Our Board of Directors has the authority, without further action by the
stockholders, to issue a total of up to 10,000,000 preferred shares in one or
more series and to fix the rights, preferences, privileges and restrictions
granted to or imposed upon any series of unissued preferred shares and to
determine the number of shares constituting any series and the designation of
the series, without any further vote or action by the stockholders.
The following summary of certain provisions of the common stock and
preferred shares does not purport to be complete and is subject to, and is
qualified in its entirety by, our amended Articles of Incorporation, Restated
Bylaws, our Certificates of Designations with respect to our Series A and Series
B Convertible Preferred Stock, and by the provisions of applicable law.
COMMON STOCK
The holders of our common stock are entitled to one vote per share on
all matters on which stockholders are entitled to vote. Subject to the rights of
holders of any class or series of shares, including preferred shares, having a
preference over the common stock as to dividends or upon liquidation, the
holders of our common stock are also entitled to dividends as may be declared by
our Board of Directors out of funds that are lawfully available,
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and are entitled upon liquidation to receive pro rata the assets that are
available for distribution to holders of common stock. Holders of the common
stock have no preemptive, subscription, or conversion rights. The common stock
is not subject to assessment and has no redemption provisions.
SERIES A CONVERTIBLE PREFERRED STOCK
We have 3,973 shares of Series A Convertible Preferred Stock
authorized, issued and outstanding. The Series A Convertible Preferred Stock is
currently convertible at any time into a maximum of 3,429,400 shares of our
common stock at a fixed conversion price of $2.6812 which represents the average
market price of our common stock for the ten days prior to the issuance of the
Series A Convertible Preferred Stock on September 17, 1999, the date we sold the
Series A Convertible Preferred Stock. Commencing September 17, 2000, the
conversion price is adjusted every six months to be the lesser of (a) 130% of
the prior conversion price or (b) 90% of the average market price for the ten
days prior to such adjustment date. The conversion price is subject to further
adjustment under certain other circumstances, including our inability to provide
the Series A Convertible Preferred Stockholders with common stock certificates
on a timely basis after receiving notice of their conversion, and our failure to
pay any applicable redemption price when due. Upon an adjustment of the
conversion price, the number of shares into which the Series A Convertible
Preferred Stock may be converted is also adjusted. The number of shares of
common stock underlying the Series A Convertible Preferred Stock is also subject
to adjustment for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to our common stock.
Dividends at the rate of $60 per annum per share are payable in cash
or, at our option, may be added to the value of the Series A Convertible
Preferred Stock subject to conversion and to the $1,000 per share liquidation
preference of the Series A Convertible Preferred Stock.
We have the right to redeem the Series A Convertible Preferred Stock at
a premium, and under some circumstances, at the market price of the common stock
into which the Series A Convertible Preferred Stock would otherwise be
convertible into. The holders of the Series A Convertible Preferred Stock also
have the right to force us to redeem all or some of their Series A Convertible
Preferred Stock at a premium or at market under the following circumstances:
- there is no closing bid price reported for our common stock
for five consecutive trading days;
- our common stock ceases to be listed for trading on the Nasdaq
SmallCap Market;
- the holders of our Series A Convertible Preferred Stock are
unable, for 30 or more days (whether or not consecutive) to
sell their common stock issuable upon conversion of the Series
B Convertible Preferred Stock pursuant to an effective
registration statement;
- we default under any of the agreements relating to our sale of
the Series A Convertible Preferred Stock;
- certain business combination events;
- the adoption of any amendment to our Articles of Incorporation
materially adverse to the holders of the Series A Convertible
Preferred Stock without the consent of the holders of a
majority of the Series A Convertible Preferred Stock; and
- the holders of the Series A Convertible Preferred Stock are
unable to convert all of their shares because of limitations
under exchange or market rules that require stockholder
approval of certain stock issuances.
SERIES B CONVERTIBLE PREFERRED STOCK
We have 2,000 shares of Series B Convertible Preferred Stock
authorized, issued and outstanding. The Series B Convertible Preferred Stock is
currently convertible at any time into a maximum of 3,436,000 shares of our
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common stock at a fixed conversion price of $1.75. Commencing March 9, 2001, the
conversion price is adjusted every six months to be the lesser of (a) the prior
conversion price or (b) the average market price for the ten days prior to such
adjustment date. The conversion price is subject to further adjustment under
certain other circumstances, including our inability to provide the Series B
Convertible Preferred Stockholders with common stock certificates on a timely
basis after receiving notice of their conversion, and our failure to pay any
applicable redemption price when due. Upon an adjustment of the conversion
price, the number of shares into which the Series B Convertible Preferred Stock
may be converted is also adjusted. The number of shares of common stock
underlying the Series B Convertible Preferred Stock is also subject to
adjustment for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to our common stock.
Dividends at the rate of $60 per annum per share are payable in cash
or, at our option, may be added to the value of the Series B Convertible
Preferred Stock subject to conversion and to the $1,000 per share liquidation
preference of the Series B Convertible Preferred Stock.
We have the right to redeem the Series B Convertible Preferred Stock at
a premium, and under some circumstances, at the market price of the common stock
into which the Series B Convertible Preferred Stock would otherwise be
convertible into. The holders of the Series B Convertible Preferred Stock also
have the right to force us to redeem all or some of their Series B Convertible
Preferred Stock at a premium or at market under the following circumstances:
- there is no closing bid price reported for our common stock
for five consecutive trading days;
- our common stock ceases to be listed for trading on the Nasdaq
SmallCap Market;
- the holders of our Series B Convertible Preferred Stock are
unable, for 30 or more days (whether or not consecutive) to
sell their common stock issuable upon conversion of the Series
B Convertible Preferred Stock pursuant to an effective
registration statement;
- we default under any of the agreements relating to our sale of
the Series B Convertible Preferred Stock;
- certain business combination events;
- the adoption of any amendment to our Articles of Incorporation
materially adverse to the holders of the Series B Convertible
Preferred Stock without the consent of the holders of a
majority of the Series B Convertible Preferred Stock; and
- the holders of the Series B Convertible Preferred Stock are
unable to convert all of their shares because of limitations
under exchange or market rules that require stockholder
approval of certain stock issuances.
WARRANTS
We also issued warrants in connection with the offering of our Series A
and Series B Convertible Preferred Stock. We issued warrants to purchase 372,967
shares of common stock to the Series A Convertible Preferred Stockholders and
warrants to purchase 250,000 shares of common stock to the Series B Convertible
Preferred Stockholders. We also issued warrants to purchase 25,000 shares of
common stock to Reedland Capital Partners and its designees as partial
compensation for their assistance in placing the Series A Convertible Preferred
Stock and warrants to purchase 12,500 to certain designees of Reedland Capital
Partners as partial compensation for their assistance in placing the Series B
Convertible Preferred Stock. The exercise price of the warrants associated with
the Series A transaction is $3.21744 per share. The exercise price of the
warrants associated with the Series B transaction is $2.00 per share. These
warrants, representing in the aggregate the right to purchase 660,467 shares of
common stock, are the only warrants we currently have outstanding. The warrants
associated with the Series A transaction expire on September 17, 2004, and the
warrants associated with the Series B transaction expire on March 9, 2005.
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The exercise price and number of shares of common stock issuable upon
exercise of the warrants held by the Series A and Series B Convertible Preferred
Stockholders are subject to adjustment in certain events, including events of
default that are similar to those described above.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is Signature
Stock Transfer, Inc.
CHARTER PROVISIONS AND EFFECTS OF NEVADA LAW
Our Articles of Incorporation authorize our Board of Directors to issue
up to 10,0000,000 shares of preferred stock from time to time in one or more
designated series. Our Board of Directors, without approval of the stockholders,
is authorized to establish the voting powers, designations, preferences,
limitations, restrictions and relative rights of each series of preferred stock,
including voting powers, preferences and relative rights that may be superior to
our common stock. As of April 6, 2000, 4,000 shares of preferred stock have been
designated Series A Convertible Preferred Stock, of which 3,973 shares were
outstanding and 2,000 shares of preferred stock have been designated Series B
Convertible Preferred Stock, of which 2,000 shares were outstanding.
Sections 78.3791 through 78.3793 of the Nevada Revised Statutes
generally apply to any acquisition of outstanding voting securities of an
issuing corporation which results in the acquiror owning more than 20% of the
issuing corporation's then outstanding voting securities. An issuing corporation
is any Nevada corporation with at least 200 stockholders, at least 100 of which
are stockholders of record and Nevada residents, and which conducts business in
Nevada.
The securities acquired in a covered acquisition are denied voting
rights unless a majority of the security holders of the issuing corporation
approve the granting of voting rights. If permitted by the issuing corporation's
Articles of Incorporation or bylaws then in effect, voting securities acquired
in the covered acquisition are redeemable by the issuing corporation at the
average price paid for the securities by the acquiror if the acquiring person
has not given timely notice to the issuing corporation or if the stockholders of
the issuing corporation vote not to grant voting rights to the acquiring
person's securities.
Unless the issuing corporation's Articles of Incorporation or bylaws
then in effect provide otherwise, if the acquiring person acquired securities
having 50% or more of the voting power of the issuing corporation's outstanding
securities and the stockholders of the issuing corporation grant voting rights
to the acquiring person, then any stockholders of the issuing corporation who
voted against granting voting rights to the acquiring person may demand that the
issuing corporation purchase, for fair value, all or any portion of his
securities.
Our Articles of Incorporation and bylaws do not limit the effect of
these provisions.
PLAN OF DISTRIBUTION
The selling stockholders, their pledgees, donees, transferees or other
successors in interest may from time to time offer and sell all or a portion of
the shares in transactions on the Nasdaq SmallCap Market, or on any other
securities exchange or market on which the common stock is listed or traded, in
negotiated transactions or otherwise, at prices then prevailing or related to
the then-current market price or at negotiated prices. The selling stockholders
or their pledgees, donees, transferees or other successors in interest may sell
their shares directly or through agents or broker-dealers acting as principal or
agent, or in block trades or pursuant to a distribution by one or more
underwriters on a firm commitment or best-efforts basis. To the extent required,
the names of any agent or broker-dealer and applicable commissions or discounts
and any other required information with respect to any particular offer will be
set forth in an accompanying prospectus supplement. Each of the selling
stockholders and their pledgees, donees, transferees or other successors in
interest reserves the right to accept or reject, in whole or in part, any
proposed purchase of the shares to be made directly or through agents.
In connection with distributions of the shares, any selling stockholder
may enter into hedging transactions with broker-dealers and the broker-dealers
may engage in short sales of the shares in the course of hedging the
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positions they assume with the selling stockholder. Any selling stockholder also
may sell the shares short and deliver the shares to close out such short
positions. Any selling stockholder also may enter into option or other
transactions with broker-dealers that involve the delivery of the shares to the
broker-dealers, which may then resell or otherwise transfer such shares. Any
selling stockholder also may loan or pledge the shares to a broker-dealer and
the broker-dealer may sell the shares so loaned or upon a default may sell or
otherwise transfer the pledged shares. The activities are limited by the
purchase agreement between us and the selling stockholders during periods when
the conversion price is subject to periodic adjustment.
The selling stockholders, any agents, dealers or underwriters that
participate with the selling stockholders in the resale of the shares of common
stock and the pledgees, donees, transferees or other successors in interest of
the selling stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act, in which case any commissions received by such agents,
dealers or underwriters and a profit on the resale of the shares of common stock
purchased by them may be deemed underwriting commissions or discounts under the
Securities Act.
In order to comply with the securities laws of particular states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers.
There is no assurance that the selling stockholders will sell any or
all of the shares.
Pursuant to registration rights agreements between us and Advantage
Fund II Ltd. and Koch Investment Group Limited, we have agreed to pay all
expenses incurred in the registration of the shares, including the legal
expenses incurred by such selling stockholders. However, we are not responsible
for selling commissions and discounts, brokerage fees or any other expenses
incurred by the selling stockholders.
In addition to selling their common stock under this prospectus, the
selling stockholders may:
- transfer their common stock in other ways not involving market
makers or established trading markets, including by gift,
distribution, or other transfer; or
- sell their common stock under Rule 144 of the Securities Act.
LEGAL OPINIONS
James, Driggs, Walch, Santoro, Kearney, Johnson & Thompson will pass
upon the validity of the common stock offered under this prospectus.
EXPERTS
The consolidated financial statements of Titan Motorcycle Co. of
America appearing in our Annual Report (Form 10-KSB) for the fiscal year ended
January 1, 2000 have been audited by PriceWaterhouseCoopers LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. These consolidated financial statements are incorporated
herein by reference in reliance upon the report given upon the authority of
PriceWaterhouseCoopers LLP as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
GOVERNMENT FILINGS: We file annual, quarterly and special reports and
other information with the Securities and Exchange Commission. You may read and
copy any document that we file at the Commission's Public Reference Room at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048,
and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Please call the Commission at 1-800-SEC-0330 for more
information about the Public Reference Rooms. Most of our filings are also
available to you free of charge at the Commission's web site at
http://www.sec.gov.
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STOCK MARKET: Our common stock is listed on the Nasdaq SmallCap Market
and similar information can be inspected and copied at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
REGISTRATION STATEMENT: We have filed a registration statement under
the Securities Act with the Commission with respect to the common stock offered
under this prospectus. This prospectus is a part of the registration statement.
However, it does not contain all of the information contained in the
registration statement and its exhibits. You should refer to the registration
statement and its exhibits for further information about us and the common stock
offered under this prospectus.
INFORMATION INCORPORATED BY REFERENCE: The Commission allows us to
"incorporate by reference" the information we file with it, which means that we
can disclose important information to you by referring you to those documents.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede this information. We have filed the following
documents with the Commission and they are incorporated by reference into this
prospectus:
- our Annual Report on Form 10-KSB for the fiscal year ended
January 1, 2000;
- our Proxy Statement for the 1999 Annual Meeting of
Stockholders, dated April 12, 1998;
- our Current Report on Form 8-K, including Exhibits, filed
March 24, 2000; and
- the description of our capital stock contained in our
registration statement on Form 10-SB, including all amendments
or reports filed for the purpose of updating the description
of our capital stock.
Please note that all other documents and reports filed under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act following the date of this prospectus and
prior to the termination of this offering will be deemed to be incorporated by
reference into this prospectus and to be made a part of it from the date of the
filing of our reports and documents.
You may request free copies of these filings by writing or telephoning
us at the following address:
Investor Relations
Titan Motorcycle Co. of America
2222 West Peoria Avenue
Phoenix, Arizona 85029
(602) 861-6977
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