EXHIBIT 7-1
VIA FACSIMILE AND AIRBORNE EXPRESS
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April 16, 2002
Mr. J. Robert Fabregas
Chief Executive Officer
Easyriders, Inc.
28210 Dorothy Drive
Agoura Hills, CA 91301
Dear Mr. Fabregas:
This will confirm our intention to proceed with the filing of an application
with the Securities and Exchange Commission (the "SEC") to strike Easyriders,
Inc.'s ("the Company") Common Stock from listing and registration on the
American Stock Exchange (the "Exchange"). This decision was reached following
careful review of the Company's continued listing eligibility.
The Exchange has adopted certain guidelines and procedures that assist in this
process and these are set forth in Part 10 of our Company Guide. The
guidelines, which are most relevant in this situation, are found in Sections
1002 and 1003.
Specifically, the Company stated in its Form 10-K for the fiscal year ended
December 31, 2001 that it had a net loss of $17,094,867 on revenues of
$28,264,933, at which time the Company had a shareholder's deficit of
$28,429,602. Consequently, the Company has fallen below Section 1003(a)(i) with
a stockholders' equity of less than $2,000,000 and has sustained losses from
continuing operations and/or net losses in two of its three most recent fiscal
years; Section 1003(a)(ii), resulting from a stockholders' equity of less than
$4,000,000 million and sustained losses from continuing operations and/or net
losses in three of its four most recent fiscal years; and Section 1003(a)(iii)
having sustained losses from continuing operations and/or net losses in its five
most recent fiscal years.
Moreover, on July 17, 2001, Easyriders, Inc., and it principal operating
subsidiary, Paisano Publications, Inc., filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Central District of California, San Fernando Valley
Division. To date, the Company continues to operate under Chapter 11, and no
final judgment has been reached. The Company has expressed its intent to enter
into a plan of liquidation if approved by the Court.
Mr. J. Robert Fabregas
April 16, 2002
Page 2
Finally, in it's Form 10-K for the fiscal year ended December 31, 2001 the
Company's auditors, Stonefield Josephson, Inc., state that there exists
substantial doubt about the Company's ability to continue as a going concern due
to the above referenced bankruptcy filing and ongoing losses.
In view of the foregoing, it appears that the Company's operating results are
unsatisfactory and its financial condition may be impaired, raising questions
about whether it will be able to continue operations or meet its obligations as
they mature. (Section 1003(a)(iv))
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Section 1010(b) of the Company Guide requires that the Company, as promptly as
possible and not later than April 23, 2002, make a public announcement through
the news media which discloses receipt of this letter and the Amex guidelines
upon which it is based./1/ The Company must provide a copy of this disclosure to
both the Amex Stock Watch and Listing Qualifications Departments at least 10
minutes prior to its public dissemination./2/ For your convenience, we have
enclosed a list of news services that the Company may use in connection with
this disclosure.
Please be advised that Section 1010(b) does not relieve the Company of its
obligations to assess the materiality of the Staff Determination as it relates
to the federal securities laws. This rule also does not provide a safe harbor
under the federal securities laws. Accordingly, the Company should consult with
securities counsel regarding its disclosure and other obligations mandated by
law./3/
In accordance with Section 1010 of the Amex Company Guide, the Company has the
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right to appeal this determination by notifying the Exchange in writing and
submitting the required hearing fee of $2,500 within five business days of
receipt of this letter./4/ Please note that the
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/1/ Should the Company subsequently fail to comply with other continued listing
guidelines, and receive notice of such deficiency, then it must also make the
disclosure required by Section 1010(b) with respect to such additional
deficiency, even if the Company has already exercised its right to appeal
Staff's determination.
/2/ This notice should be provided to the attention of Jay Bono in the Amex
Stock Watch Department (telephone: 212-306-8383; facsimile: 212-306-1488), and
to the Amex Listing Qualifications Department (telephone: 212-306-1331;
facsimile: 212-306-2394).
/3/ While the Amex does not endorse any particular format or provide a sample
press release related to this disclosure, you may wish to consider language that
discloses that: on (DATE OF RECEIPT OF STAFF DETERMINATION) the Company received
notice from Amex Staff indicating that the Company no longer complies with
Exchange's continued listing guidelines due to (LOSSES IN TWO OF ITS MOST RECENT
FISCAL YEARS WITH EQUITY BELOW $2 MILLION, ETC.), as set forth in Section
1003(____) of the Company Guide, and that its securities are, therefore, subject
to being delisted from the Exchange. The Company has appealed this
determination and requested a hearing before a committee of the Exchange. There
can be no assurance Company's request for continued listing will be granted. The
Company may also wish to consider including in its public disclosure whether its
securities may be eligible to trade on another marketplace.
/4/ Section 1010 of the Amex Company Guide was recently amended to provide for
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the imposition of hearing fees on issuers in connection with issuer requests for
review of Exchange delisting decisions (Securities and Exchange Commission
Release No. 34-44768; File No. SR-Amex-2001-36).
Mr. J. Robert Fabregas
April 16, 2002
Page 3
hearing fee is non-refundable and must be paid by certified check payable to
"The American Stock Exchange LLC" and submitted separately from the hearing
request in accordance with the instructions on the attached Hearing Fee Payment
Form. In accordance with Section 1010 of the Amex Company Guide, the Company
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will be deemed to have waived the opportunity for a hearing, and a hearing will
not be scheduled, if the hearing fee has not been submitted to the Exchange
within five days of receipt of this letter. The request for a hearing and a copy
of the check should be submitted to:
Claudia Crowley
Assistant General Counsel
Listing Qualifications Hearings
American Stock Exchange LLC
86 Trinity Place
New York, NY 10006
Tel: (212) 306-2432
Fax: (212) 306-5359
Hearing requests should not contain written arguments in support of the Company
position. Should the Company choose to appeal the Staff's determination, it
will have an opportunity during the hearing process to submit written materials
in support of its appeal, as well as to make an oral presentation at the
hearing. If you would like additional information regarding the hearing process,
please contact Ms. Crowley.
The Company has the right to appeal this determination by notifying the Exchange
no later than April 23, 2002. If the Company elects not to appeal, this
decision will become final and an application will be filed with the SEC to
remove the Company's common stock from listing and registration. Please call me
or Ryan Shah at (212) 306-2395 if you have any questions.
Very truly yours,
/s/ John T. Tubman