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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 27, 2000
Titan Motorcycle Co. of America
(Exact Name of Registrant as Specified in Charter)
Nevada 000-24477 86-0776876
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2222 West Peoria Avenue, Phoenix, Arizona 85029
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (602) 861-6977
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER ITEMS.
As described in a previous report on Form 8-K filed with the SEC on July
20, 2000, Titan was notified by Nasdaq that it was not in compliance with
Nasdaq's continued SmallCap Market criteria. Specifically, Nasdaq noted that
Titan did not have either $2 million in net tangible assets, $35 million of
market capitalization or $5 million in net income. Subsequent to Nasdaq's
notification, Titan's Series A and Series B Convertible Preferred Stockholders
agreed to modify the terms of their preferred stock so that the preferred stock
would be characterized under generally accepted accounting principles as equity
rather than as mezzanine instruments, which had the effect of increasing Titan's
net tangible assets. On May 24, 2000, Titan submitted a plan of compliance and a
request for extension to comply with Nasdaq's maintenance criteria. By a letter
dated September 22, 2000, Nasdaq approved Titan's plan of compliance and granted
the Company's request for an extension to regain compliance.
To demonstrate compliance with Nasdaq's net tangible asset requirement,
Titan is filing this report together with an unaudited balance sheet and
unaudited income statement giving effect, on a pro forma basis, to the
recharacterization of the Series A and B Convertible Preferred Stock from
mezzanine debt to equity. The balance sheet and income statement are set forth
below.
Despite Titan's compliance with Nasdaq's net tangible assets requirement,
Titan continues to be at risk of delisting by Nasdaq. As described in a previous
report on Form 8-K filed with the SEC on August 23, 2000, Titan's two
independent directors resigned on August 18, 2000. By a letter dated September
22, 2000, Nasdaq has informed Titan that it no longer meets the independent
director and Audit Committee requirements currently applicable to the Company.
Titan must submit a plan and timetable of compliance with Nasdaq by October 6,
2000, detailing how it intends to comply with these requirements.
As described in a previous report on Form 8-K filed with the SEC on
September 7, 2000, Titan received a letter from Nasdaq on August 30, 2000
informing Titan that its common stock had failed to meet the minimum bid price
of $1.00 over the preceding 30 consecutive trading days, and that, as a result,
Titan did not meet the maintenance criteria for continued listing on the Nasdaq
SmallCap Market. Pursuant to the letter, Nasdaq has provided Titan 90 days to
comply with the minimum bid price requirement. If Titan is unable to comply by
November 28, 2000, its common stock will be delisted at the opening of business
on November 30, 2000.
If the Company fails to maintain its Nasdaq SmallCap Market listing for
its securities, trading in its stock is likely to be materially adversely
effected. Among other things, the Company's common stock would then constitute
"penny stock," which would place increased regulatory burden upon brokers,
making them less likely to make a market in the stock.
In addition, if Titan is delisted, it will constitute a default under the
terms of the Securities Purchase Agreements covering the 12% Convertible
Debentures and the Series A, Series B and Series C Convertible Preferred Stock
previously issued by Titan. As a result, Titan may be required to redeem the
Debentures or the Convertible Preferred Stock at a time when it does not have
sufficient funds to do so. In this case, Titan may be forced into liquidation or
reorganization under the federal bankruptcy laws.
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ITEM 7. FINANCIAL STATEMENTS.
TITAN MOTORCYCLE CO. OF AMERICA
PRO FORMA BALANCE SHEET
AS OF JULY 1, 2000
<TABLE>
<CAPTION>
PRO FORMA
ASSETS JULY 1, 2000 ADJUSTMENTS JULY 1, 2000
------------ ----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 163,822 $ 163,822
Accounts receivable, net 1,977,203 1,977,203
Accounts receivable - related party, net 425,000 425,000
Inventory, net 14,606,893 14,606,893
Prepaid expenses 256,653 256,653
--------------- ---------------
TOTAL CURRENT ASSETS $ 17,429,571 $ 17,429,571
Property and equipment, net $ 1,823,035 $ 1,823,035
Other assets 17,317 17,317
Trademarks,net 84,516 84,516
--------------- ---------------
TOTAL ASSETS $ 19,354,439 $ 19,354,439
=============== ===============
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank Overdraft $ -- $ --
Accounts payable 3,930,753 3,930,753
Accrued expenses 1,368,426 (449,491) A 918,935
Note Payable - Line of Credit 6,028,228 6,028,228
Repurchase Obligation 1,262,092 1,262,092
Current portion of notes payable 941,782 941,782
--------------- ---------------
TOTAL CURRENT LIABILITIES $ 13,531,281 $ 13,081,790
Notes payable 2,583,212 (600,000) A 1,983,212
--------------- ---------------
TOTAL LIABILITIES $ 16,114,493 $ 15,065,002
Redeemable Preferred Stock
Cumulative preferred stock, 7,273
share outstanding $ 5,608,836 (4,809,831) B $ 799,005
Stockholders' Equity
Preferred Stock $ -- 4,809,831 B $ 4,809,831
Common stock, par value $.001; 100,000,000
shares authorized 18,005 725 A 18,730
Additional paid in capital 10,735,424 1,048,766 A 11,784,190
Unearned compensation (27,843) (27,843)
Accumulated deficit (13,094,476) (13,094,476)
--------------- ---------------
TOTAL STOCKHOLDERS' DEFICIT $ (2,368,890) 5,859,322 $ 3,490,432
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 19,354,439 $ 19,354,439
=============== ===============
NET WORTH ANALYSIS:
PRO FORMA NET WORTH AS OF JULY 1, 2000 $ (2,368,890) 5,859,322 $ 3,490,432
</TABLE>
A = Conversion of subordinated debt and related accrued interest to common
stock.
B = Reclassification of Redeemable Preferred Stock to Preferred Stock based upon
amendment of agreements.
Titan Motorcycle Co. of America
Statement of Operations
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
July 1, 2000
----------------------
<S> <C>
Sales, net $ 19,146,421
Cost of goods sold 17,958,060
------------
Gross profit $ 1,188,361
------------
Operating expenses:
Selling, general and administrative $ 3,654,987
Research and development 76,450
------------
Total operating expenses $ 3,731,437
Income (loss) from operations $ (2,543,076)
Other income (expense):
Other income (expense) $ 3,522
Non recurring finance costs (185,000)
Interest expense (520,154)
------------
Total other income (expense) $ (701,632)
Income (loss) before income taxes $ (3,244,708)
Income taxes --
------------
Net loss $ (3,244,708)
============
</TABLE>
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Titan Motorcycle Co. of America
/s:/Francis S. Keery/
------------------------------
Francis S. Keery
Chief Executive Officer
Dated: September 27, 2000
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