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As Filed With The Securities And Exchange Commission On September 14, 2000
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TITAN MOTORCYCLE CO. OF AMERICA
(Exact name of registrant as specified in its Charter)
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NEVADA 86-0776876
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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2222 WEST PEORIA AVENUE
PHOENIX, ARIZONA 85029
(602) 861-6977
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
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FRANCIS S. KEERY, CHIEF EXECUTIVE OFFICER
TITAN MOTORCYCLE CO. OF AMERICA
2222 WEST PEORIA AVENUE
PHOENIX, ARIZONA 85029
(602) 861-6977
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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COPY TO:
STEVEN D. PIDGEON, ESQ.
SNELL & WILMER L.L.P.
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
|_|
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Share Offering Price Registration Fee
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Common Stock, $.001 par value 8,805,910 Shares(1) $ .344(2) $ 3,029,233 $ 799.00
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Total 8,805,910 Shares(1) $ 3,029,233 $ 799.00
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(1) Shares of common stock that may be offered pursuant to this registration
statement consist of 7,780,750 shares issuable upon conversion of $750,000 in
principal amount of 12% Convertible Debentures and 1,025,160 shares issuable
upon exercise of warrants issued in connection with the 12% Convertible
Debentures. For purposes of estimating the number of shares of common stock to
be included in this registration statement, we calculated (i) 200% of the
aggregate number of shares of common stock issuable in connection with the
conversion of the 12% Convertible Debentures, determined as if the Convertible
Debentures, together with accrued and unpaid interest through August 31, 2002,
were converted in full at the conversion price of $0.24, which was the
conversion price in effect on September 7, 2000, plus (ii) 100% of the number of
shares of common stock issuable upon exercise of the warrants. Pursuant to Rule
416 under the Securities Act of 1933, as amended, this Registration Statement
also covers such indeterminate additional shares of common stock as may become
issuable as a result of stock splits, stock dividends or other similar
transactions.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices of
the common stock on September 6, 2000, as reported by the Nasdaq SmallCap
Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
Titan Motorcycle Co. of America
8,805,910 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 16.
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 sale price of our common stock as reported by the
Nasdaq SmallCap Market on September 6, 2000 was $0.344 per share.
BEFORE PURCHASING ANY OF THE SHARES COVERED BY THIS PROSPECTUS, YOU SHOULD
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 YOUR
ENTIRE 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.
The date of this prospectus is September ____,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....................................................................................... 8
USE OF PROCEEDS.................................................................................................. 9
SELLING STOCKHOLDERS............................................................................................. 9
DESCRIPTION OF SECURITIES........................................................................................ 10
PLAN OF DISTRIBUTION............................................................................................. 16
LEGAL OPINIONS................................................................................................... 17
EXPERTS ......................................................................................................... 17
WHERE YOU CAN FIND MORE INFORMATION.............................................................................. 17
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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 THOSE
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 approximately 55
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 $23,000.
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 YOUR ENTIRE INVESTMENT.
WE WILL BE UNABLE TO CONTINUE OUR OPERATIONS IF WE ARE UNABLE TO REPLACE OUR
SENIOR CREDIT FACILITY AND RAISE NEW CAPITAL
The report of the independent accountants on the financial statements
included in our Form 10-KSB for the fiscal year ended January 1, 2000 included
an explanatory paragraph discussing going concern issues. These issues included
the fact that our primary financing source expired April 10, 2000, at year-end
we did not have another facility available to refinance this debt, and we were
incurring losses from operations.
We received modifications and extensions through September 18, 2000 to
our line of credit with Wells Fargo Credit, Inc. The latest extension was
granted in light of our continuing inability to date to secure a new credit
facility to replace the existing line of credit. In this regard, discussions
with two potential new lenders that had expressed a preliminary interest in
replacing and expanding the existing facility have terminated, and we are in the
process of seeking additional capital and a new lender. Among other things, the
modification and extension with Wells Fargo further limits our borrowing
capacity and requires that we develop and implement profit improvement and asset
reduction plans and engage an investment banker to seek strategic alternatives,
including selling the business. If we are unable to replace or further extend
the Wells Fargo line with a new credit facility on a timely basis, we will be
forced to sell or wind down our business. In addition, the loan agreement with
Wells Fargo contains various continuing obligations, including financial
covenants. If we fail to satisfy these covenants, we would be in default under
the loan agreement, which could force us to liquidate or file for
reorganization.
As of September 14, 2000, the Company was not in compliance with
certain of these covenants and has received a verbal waiver from Wells Fargo
Credit, Inc.
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WE ARE SUFFERING FROM A LIQUIDITY CRISIS
Our operations require significant levels of cash to fund the
production of our motorcycles. We have funded our operations with our existing
credit facility, equity infusions and cash from operations. Our lender has
reduced our credit line and we may not be able to raise new capital. In
addition, we are receiving increasing pressure for additional payments from
trade creditors, and are encountering difficulties in obtaining necessary parts
from these suppliers to manufacture our motorcycles.
Many of our dealers received floor plan financing for our products
through Transamerica Commercial Finance Corporation and Deutsche Financial
Services. Although the dealers are the obligors under these floor plan
agreements and are responsible for all principal and interest payments, we are
subject to a standard repurchase agreement that 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. Transamerica
has notified us of a default and has terminated flooring arrangements with
certain affiliated dealerships. In addition, three distributorships owned by the
Keery family, which controls Titan, are in the process of being sold or shut
down. These dealerships have historically accounted for a substantial portion of
our sales. These affiliated distributorships currently owe us $425,000 in net
receivables, collection of which is uncertain. As a result of the cancellation
by Transamerica, the inventory held by these dealerships has been returned to
us, with a corresponding payment due Transamerica in the amount of $1,300,000.
In connection with this repurchase of $1,300,000 in motorcycle inventory, we
have entered into a forbearance agreement with Transamerica that requires us to
repurchase the related motorcycles over a maximum three month period with a
required minimum payment in three equal installments. The final installment is
due on October 17, 2000. We have subsequently sold approximately one-half of the
related motorcycles and satisfied the required installment in August 2000 and
anticipate making the required installment for September 2000 when due.
There can be no assurance that we will be able to sell the remaining
motorcycles or meet the installment payment requirements. If we are unable to
comply with the terms of the forbearance agreement, our ability to sell
motorcycles funded with commercial flooring may be eliminated, which would have
a material adverse impact on our financial condition.
In light of the foregoing, we are actively reviewing a number of
possible strategic alternatives, including:
- seeking alternative sources of capital or debt financing;
- negotiating to maintain the Transamerica and Deutsch
facilities in place;
- implementing a further substantial reduction in our operations
and workforce (we reduced our workforce by approximately 25%
on July 20, 2000 and an additional approximately 21% on August
25,2000); and
- selling or merging the Company.
There can be no assurance that we will be able to implement any of these
strategies. The failure to accomplish one or more of these strategies would
materially adversely effect our financial performance and liquidity. We may also
be forced to liquidate or file for reorganization under the federal bankruptcy
laws.
AMENDMENTS TO OUR OUTSTANDING PREFERRED STOCK ARE LIKELY TO CAUSE SUBSTANTIAL
ADDITIONAL DILUTION TO HOLDERS OF TITAN'S COMMON STOCK
Because the market price of our common stock has declined significantly
since the dates of issuance of the Series A, Series B and Series C Convertible
Preferred Stock, and because the conversion prices of the Series A, Series B and
Series C Convertible Preferred Stock were recently amended to be equal to the
lesser of a fixed conversion price or a variable conversion price, the overall
effect of these changes was to significantly reduce the respective conversion
prices of the Series A, Series B and Series C Convertible Preferred Stock from
their prior levels, resulting in a corresponding significant increase in the
number of shares of our common stock that may be issued upon conversion. If all
shares of Series A, Series B and Series C Convertible Preferred Stock were
converted
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as of August 14, 2000, the effective date of the amendments (assuming the
Series B initial reset date was accelerated to August 14, 2000), we would have
been required to issue a total of 14,865,775 additional shares of our common
stock. As a result, the amendments to the Series A, Series B and Series C
Convertible Preferred Stock will result in substantial dilution to the holders
of our common stock. Even if the price of our common stock rises above the fixed
conversion prices of the Series A, Series B and Series C Convertible Preferred
Stock, the method of calculating the conversion prices for each series of
Preferred Stock will prevent the conversion price from exceeding 130% of the
previous conversion price for the Series A Convertible Preferred Stock, $1.75
for the Series B Convertible Preferred Stock, and $0.43 for the Series C
Convertible Preferred Stock.
If, on the other hand, the market price of our common stock continues
to decline, the number of shares issuable upon conversion of the Series A,
Series B and Series C Convertible Preferred Stock will continue to increase,
resulting in further dilution to the holders of our common stock. The issuance
and resale of significant additional shares of common stock may result in
further price declines.
WE FACE POSSIBLE DELISITING FROM THE NASDAQ SMALLCAP MARKET
Our common stock is currently listed on the Nasdaq SmallCap Market. Our
net tangible assets, however, fell below the minimum required by Nasdaq,
primarily as a result of our Series A and Series B Convertible Preferred Stock
being classified as mezzanine debt rather than equity. Nasdaq notified us of its
intention to delist our common stock from the Nasdaq SmallCap Market unless we
provided Nasdaq with a specific plan as to how we expect to achieve and sustain
compliance with all Nasdaq SmallCap Market listing requirements. Subsequent to
Nasdaq's notification, our Series A and Series B preferred stockholders agreed
to modify the terms of their preferred stock so that it would be characterized
under generally accepted accounting principles as capital, rather than as
mezzanine instruments, which has had the effect of increasing our net tangible
assets. Management, however, is currently evaluating the accounting consequences
of the amendments to the Series A, Series B and Series C Convertible Preferred
Stock in order to determine the impact, if any, on the calculation of our net
tangible assets for Nasdaq compliance purposes. Nasdaq also inquired about the
explanatory paragraph in the report rendered by the our independent public
accountant regarding the going concern issues discussed above. We advised Nasdaq
that the explanatory paragraph discussing going concern issues arose principally
because our primary financing source, our line of credit with Wells Fargo,
expired on April 10, 2000 and at year-end we did not have another facility
available to refinance this debt and we continued to incur losses from
operations. Although we have received an extension of our credit facility with
Wells Fargo until September 18, 2000, there can be no assurance that we will be
able to secure a replacement credit facility by the extended termination date,
obtain an additional extension beyond September 18, 2000, or that we can comply
with the financial and other covenants as modified.
Currently, Nasdaq has not advised us whether our plan of compliance was
acceptable to maintain our Nasdaq listing. In light of our current situation, we
are unsure whether Nasdaq will take action to delist our securities and, if so,
what the timing of such an action would be.
In addition, our two independent directors announced their resignations
from the Board of Directors on August 18, 2000. Although we are actively seeking
other independent directors to fill the vacancies on our Board of Directors,
there can be no assurance that we will be successful in this regard,
particularly given our current financial difficulties. Because Nasdaq's
continued maintenance criteria also requires a minimum of two independent
directors, if we are unable to fill the vacancies created by the recent
resignation of our two independent directors on a timely basis, we may be
delisted from Nasdaq even if we meet other maintenance criteria.
Finally, on August 30, 2000, we received a letter from Nasdaq informing
us that our 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, we did not
meet the maintenance criteria for continued listing on the Nasdaq SmallCap
Market. Pursuant to this letter, Nasdaq has provided us 90 days, or until
November 28, 2000, to comply with the minimum bid price requirement. If we are
unable to comply with the minimum bid price requirement by that date, our common
stock will be delisted at the opening of business on November 30, 2000.
If we fail to maintain our Nasdaq listing, the market value of our
common stock may decline further and trading in our stock is likely to be
materially adversely effected. Among other things, because our common stock
would then constitute "penny stock" under the Securities Exchange Act of 1934,
as amended, any broker engaging
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in a transaction in our securities would be required to provide any customer
with a risk disclosure document, disclosure of market quotations, if any,
disclosure of the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market values of our
securities held in the customer's accounts. The bid and offer quotation and
compensation information must be provided prior to effecting the transaction and
must be contained on the customer's confirmation. If brokers become subject to
the "penny stock" rules when engaging in transactions in our securities, they
would become less willing to engage in such transactions, thereby making it more
difficult for our securityholders to sell their common stock, which may result
in a decline in stock value.
WE HAVE A HISTORY OF LOSSES AND WE MAY LOSE MONEY IN THE FUTURE
We incurred losses of $8.1 million in fiscal year 1999 and a loss of
$1,487,215 in the first quarter of 2000. Due to substantial adjustments in
inventory levels and valuations and the establishment of a significant reserve
in the second quarter of 2000, taken in conjunction with certain affiliated
store receivables and motorcycle repossession and resale, we reported a loss of
$1,607,493 in the second quarter of 2000. We may continue to be unprofitable in
the third quarter of 2000.
In light of our cash crisis, inability to finance full production, and
reduction in workforce, we may incur additional losses in the future. To achieve
and maintain profitability, we will 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:
- resolve our liquidity crisis;
- increase consumer awareness of our products;
- establish and maintain a reputation for high quality products;
- increase sales through our independent third party dealers;
- expand our dealer network; and
- finance these activities.
We cannot assure you that we will meet these objectives.
WE DEPEND HEAVILY ON THIRD PARTY PARTS SUPPLIERS AND ARE EXPERIENCING
DIFFICULTIES WITH THEM
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. In addition, due to our lack of operating capital, we are
receiving increasing pressure for additional payments from trade creditors, and
are encountering difficulties in obtaining necessary parts from these suppliers
to manufacture our motorcycles.
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
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. Failures by
independent third party dealers to adequately promote our products could
negatively affect our results of operations. As a result of our financial
situation, we are losing dealerships operated by principals of the Company, and
may lose others. This would materially adversely affect our ability to continue
in business.
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COMPLICATIONS IN ESTABLISHING AND INTEGRATING OUR NEW "PHOENIX BY TITAN" LINE OF
MOTORCYCLES COULD MATERIALLY ADVERSELY AFFECT OUR EXPENSES, GROSS MARGINS AND
OPERATING RESULTS
We introduced our "Phoenix by Titan" line of heavyweight motorcycles in
1999. 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 ongoing difficulties that we may
experience;
- successfully adapt to an assembly line manufacturing process;
- gain ormaintain consumer acceptance of this product line; and
- finance the production of the motorcycles.
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 with this line. Any of these issues could materially
adversely affect our expenses, gross margins and operating results.
BECAUSE WE SELL A DISCRETIONARY PRODUCT, 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 on these types of items 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;
- Excelsior-Henderson, which entered the market with their
"Super X" model; and
- Polaris, which recently entered the market with their "Victory
V92C" model.
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OUR PRODUCTS COULD CONTAIN DEFECTS CREATING PRODUCT RECALLS AND WARRANTY CLAIMS
THAT 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 also could negatively
impact the goodwill and quality associated with our brand name. Defects also
could give rise to litigation resulting in liability for judgments that 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 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 that may adversely affect the value of
goods purchased;
- trade restrictions;
- delays in shipping; - 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 MAY ATTEMPT TO ESTABLISH SALES OPERATIONS IN FOREIGN MARKETS, WHICH REQUIRES
SIGNIFICANT MANAGEMENT ATTENTION AND FINANCIAL RESOURCES, AND THIS STRATEGY MAY
NOT BE SUCCESSFUL
If we can obtain necessary financing to sustain our operations, we may
attempt to establish sales operations in foreign markets; however, 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;
- achieving market acceptance of our products;
- parts availability;
- changes in diplomatic and trade relationships;
- tariffs;
- currency exchange rate; and
- unexpected changes in regulatory requirements.
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.
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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 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 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 CAUSE VOLATILITY IN
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;
- disruptions in the supply of key components and parts;
- seasonal variations in the sale of our products;
- general economic conditions;
- liquidity issues; and
- establishment of reserves.
WE COULD BE REQUIRED TO REDEEM OUR SERIES A, SERIES B AND SERIES C 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, Series B and Series C Convertible
Preferred Stock have the right to require us to redeem their Preferred Stock
upon the occurrence of certain events. The redemption of our Series A, Series B
or Series C Convertible Preferred Stock would require a large expenditure of
capital funds to satisfy the redemption. However, the holders of the Series A
and Series B Convertible Preferred Stock agreed to amend the terms and
conditions of the Series A and Series B Convertible Preferred Stock through the
filing of an amended and restated certificate of designations. The amended and
restated certificates of designation were filed with the Secretary of State of
the State of Nevada on July 16, 2000. The amendments allow us to deliver a
control notice to the Series A or Series B holders against their delivery of a
redemption notice if the event or circumstances giving rise to the redemption
notice are outside of our control. The delivery of a control notice will permit
us to adjust the conversion price of the Series A or Series B Convertible
Preferred Stock in lieu of redemption. Although we may not be forced to redeem
the entire amount of the Series A and Series B Convertible Preferred Stock
because of these provisions, the reduction in the conversion price would result
in a substantial increase in the number of shares of common stock that would be
issued upon conversion of the Series A and Series B Convertible Preferred Stock.
7
<PAGE> 12
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.
As of August 14, 2000, the effective date of the amendments to the
Series A, Series B, and Series C Convertible Preferred Stock, the Series A,
Series B, and Series C Convertible Preferred Stock were convertible into
14,865,775 additional shares of common stock (assuming the Series B initial
reset date was accelerated to August 14, 2000). The conversion of these
securities will dilute your percentage ownership of common stock. These
securities, unlike common stock, also 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.
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, Series B or Series C Convertible
Preferred Stock, or in the event of certain defaults under the Series A, Series
B or Series C Preferred Stock, which could result in a dilution adjustment. Any
such event could adversely affect the price of our stock and our ability to
raise additional capital.
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 effect 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 that 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 ability to obtain
additional capital, our prospects of replacing our line of credit with Wells
Fargo, our efforts in attempting to achieve profitability, our business
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 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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<PAGE> 13
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
as of the filing of this Registration Statement. The shares offered by this
prospectus may 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 Esquire Trade & Finance Inc. and Celeste
Trust Reg. under this prospectus may be issued upon conversion of the $750,000
in principal amount of 12% Convertible Debentures and exercise of warrants
acquired by the holders of the Convertible Debentures from us in a private
placement completed on August 14, 2000. Under the terms of the 12% Convertible
Debentures and the related warrants, no selling stockholder may convert the 12%
Convertible Debentures or exercise warrants to the extent that conversion or
exercise would cause the holder's beneficial ownership of our common stock
(excluding shares underlying unconverted Debentures and unexercised warrants) to
exceed 9.99% of the outstanding shares of common stock. The $750,000 in
principal amount of 12% Convertible Debentures and the related warrants were
sold to the holders of our Series C Convertible Preferred Stock. The beneficial
ownership limitation described in the preceding sentence applies to these
securities as well. The shares of common stock issuable upon conversion of the
Series C Convertible Preferred Stock and exercise of those related warrants were
previously registered on Registration Statement No.
333-41868 filed with the Commission on August 25, 2000.
<TABLE>
<CAPTION>
SHARES OWNED
AFTER OFFERING PERCENTAGE OF
MAXIMUM NUMBER OF (ASSUMING ALL COMMON STOCK
SHARES OWNED SHARES TO BE SOLD SHARES OFFERED OWNED AFTER
NAME OF SELLING STOCKHOLDER PRIOR TO THIS OFFERING IN THIS OFFERING ARE SOLD) OFFERING
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Esquire Trade & Finance
Inc. 6,529,964(1)(3) 4,402,955(2) 0(4) 0%(4)
-----------------------------------------------------------------------------------------------------------
Celeste Trust Reg. 6,529,964(1)(3) 4,402,955(2) 0(4) 0%(4)
-----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the number of shares issuable and issued and unsold
upon: (i) conversion of the Series C Convertible Preferred
Stock, including two years of accrued dividends thereon, which
dividends are payable at our option in shares of common stock,
at an assumed variable conversion price of $0.24 per share
(the conversion price in effect on September 7, 2000); (ii)
upon conversion of $750,000 in principal amount of our 12%
Convertible Debentures issued to the holders of the Series C
Convertible Preferred Stock on August 14, 2000 at an assumed
variable conversion price of $0.24 and including accrued
interest thereon through August 31, 2002 (the maturity date);
and (iii) upon the exercise of warrants issued to these
stockholders in June 2000 and in connection with the sale of
the 12% Convertible Debentures on August 14, 2000.
(2) In accordance with the Registration Rights Agreement between
us and Esquire and Celeste, the number of shares shown as
offered by this prospectus represents 200% of the number of
shares issuable upon conversion of the 12% Convertible
Debentures (and interest thereon though the maturity date) as
described in clause (ii) of note (1) above, plus the shares
issuable upon exercise of the related warrants issued in
August 2000.
(3) The actual conversion price is applicable to the 12%
Convertible Debentures and will be calculated using a formula
based on a variable conversion price tied to the market price
of our common stock and may be lower than the initial fixed
conversion rate. The actual number of shares of common stock
issuable upon the conversion of the 12% Convertible Debentures
and
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<PAGE> 14
exercise of the related warrants is therefore subject to
adjustment and could be materially more than the number
estimated in the table. This variation is due to factors that
cannot be predicted by us at this time. The most significant
of these factors is the future market price of our common
stock.
(4) This assumes that all shares of common stock previously
registered under Registration Statement No. 333-41868 filed
with the Commission on August 25, 2000 are sold.
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 C Convertible Preferred Stock or shares issuable upon
conversion of the Series C 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 September 5, 2000, 19,307,064 shares
of common stock were issued and outstanding. Additionally, as of September 5,
2000, we had outstanding options to purchase 1,285,000 shares of our common
stock, warrants to purchase 3,252,733 shares of our common stock, 3,824 shares
of our Series A Convertible Preferred Stock, 2,000 shares of our Series B
Convertible Preferred Stock and 1,230 shares of our Series C Convertible
Preferred Stock.
Our Board of Directors has the authority, without further action by the
stockholders, to issue a total of up to 9,992,700 additional 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 Articles of Incorporation, as amended,
Restated Bylaws, our Certificates of Designations with respect to our Series A,
Series B and Series C 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 entitled to dividends as may be declared by our
Board of Directors out of funds that are lawfully available, 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 had 3,824 shares of Series A Convertible Preferred Stock authorized,
issued and outstanding as of September 5, 2000. The Series A Convertible
Preferred Stock is currently convertible at any time into shares of our common
stock at a variable conversion price $.5147, which represents 90% of the closing
bid price of our common stock for the ten days prior to August 14, 2000, the
revised initial reset date. On September 17, 2000, and every two months
thereafter, the conversion price will be adjusted to be the lesser of (a) 130%
of the prior conversion price or (b) 90% of the average closing bid 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
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<PAGE> 15
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.
However, in no event will the Series A Convertible Preferred
Stockholders be permitted to convert if the number of shares of common stock
issuable upon conversion would result in beneficial ownership by a holder of the
Series A Convertible Preferred Stock and its affiliates of more than 4.9% of the
outstanding shares of 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. The holders of the Series A Convertible Preferred Stock also have
the right to require 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
A Convertible Preferred Stock pursuant to an effective
registration statement;
- we default under any of the agreements relating to the 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.
However, the terms and conditions of the Series A Convertible Preferred
Stock have been amended to allow us to deliver a control notice to the Series A
holders against their delivery of a redemption notice if the event or
circumstances giving rise to the redemption notice are outside of our control.
The delivery of a control notice will permit us to adjust the conversion price
of the Series A Convertible Preferred Stock in lieu of redemption. Effectively,
this permits us to classify the Series A Convertible Preferred Stock as equity
rather than mezzanine instruments in accordance with generally accepted
accounting principles.
SERIES B CONVERTIBLE PREFERRED STOCK
We had 2,000 shares of Series B Convertible Preferred Stock authorized,
issued and outstanding as of September 5, 2000. The Series B Convertible
Preferred Stock is currently convertible at any time into shares of our common
stock at an initial fixed conversion price of $1.75. Commencing January 9, 2001,
the conversion price will be adjusted every three months to be the lesser of (a)
$1.75 or (b) the average closing bid 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 holders of
Series B Convertible Preferred Stock with common stock certificates on a
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<PAGE> 16
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.
However, in no event will the holders of the Series B Convertible
Preferred Stock be permitted to convert if the number of shares of common stock
issuable upon conversion would result in beneficial ownership by a holder of
Series B Convertible Preferred Stock and its affiliates of more than 4.9% of the
outstanding shares of 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. The holders of the Series B Convertible Preferred Stock also have
the right to require 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 the 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.
However, the terms and conditions of the Series B Convertible Preferred
Stock have been amended to allow us to deliver a control notice to the Series B
holders against their delivery of a redemption notice if the event or
circumstances giving rise to the redemption notice are outside of our control.
The delivery of a control notice will permit us to adjust the conversion price
of the Series B Convertible Preferred Stock in lieu of redemption. Effectively,
this permits us to classify the Series B Convertible Preferred Stock as equity
rather than mezzanine instruments in accordance with generally accepted
accounting principles.
SERIES C CONVERTIBLE PREFERRED STOCK
As of September 5, 2000 we had 1,300 shares of Series C Convertible
Preferred Stock authorized, all of which were issued, 70 of which had been
converted and were not subject to reissuance and 1,230 of which remained
outstanding. The outstanding Series C Convertible Preferred Stock is currently
convertible at any time into shares of our common stock at a variable conversion
price. The conversion price is equal to the lesser of a fixed conversion price
equal to
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<PAGE> 17
70% of the average of the closing bid price for the five trading days
immediately preceding August 14, 2000, or $0.43 per share, or a variable
conversion price equal to 70% of the average of the closing bid price for the
lowest 5 trading days (which need not be consecutive) during the 22 consecutive
trading days ending on the trading day immediately preceding the relevant
conversion date. As of September 7, 2000, the variable conversion price was
$0.24 per share.
The number of shares of common stock underlying the Series C
Convertible Preferred Stock is subject to adjustment for stock splits, stock
dividends, capital reorganizations and similar events relating to our common
stock. Subject to the limit referred to above, the Series C Convertible
Preferred Stock converts automatically on the second anniversary of the date of
the issuance.
Following effectiveness of this registration statement, we may compel
the conversion of any or all of the outstanding Series C Convertible Preferred
Stock at the conversion price in effect if for any 20 consecutive trading days
both (a) the closing bid price of our common stock is greater than $1.90 per
share, and (b) the average daily trading volume of our common stock is at least
50,000 shares per trading day.
However, in no event will the Series C Convertible Preferred
Stockholders be permitted to convert if the number of shares of common stock
issuable upon conversion would result in beneficial ownership by a holder of
Series C Convertible Preferred Stock and its affiliates of more than 9.99% of
the outstanding shares of common stock.
Dividends at the rate of 12% per annum are payable quarterly or on
conversion of the Series C Convertible Preferred Stock in cash or, at our
option, in shares of our common stock based on the conversion rate in effect on
the relevant date.
Subject to certain restrictions in a subordination agreement with our
primary lender, Esquire and Celeste each have the right to require us to redeem
the Series C Convertible Preferred Stock at a premium upon the occurrence of any
of the following events:
- The amount of common stock reserved for issuance upon
conversion of the Series C Convertible Preferred Stock is less
than 150% of the number of shares of common stock issuable
upon potential conversion of the Series C Convertible
Preferred Stock for 10 consecutive trading days and we fail to
increase the reserved amount above the 150% threshold for 90
days thereafter;
- We are unable to issue sufficient shares of common stock upon
conversion of the Series C Convertible Preferred Stock as a
result of Nasdaq Rule 4310(c)(25)(H)(i) or Rule 4460(i)(1); or
- We are unable to timely deliver certificates representing the
common stock issuable on conversion of the Series C
Convertible Preferred Stock.
CONVERTIBLE DEBENTURES
On August 14, 2000, we sold $750,000 in principal amount of our 12%
Convertible Debentures to the holders of our Series C Convertible Preferred
Stock. Unless and until shareholder approval is obtained, the Debentures are
convertible at any time into a maximum of 3,861,413 shares of Titan's common
stock. The Debentures are convertible at the lower of a fixed conversion price
or a variable conversion price. The fixed conversion price is equal to 70% of
the average of the closing bid price of our common stock for the five trading
days immediately preceding the closing date, or $0.43 per share. The variable
conversion price is equal to 70% of the average of the five lowest closing bid
prices (which need not be consecutive days) of our common stock during the 22
trading days immediately preceding the applicable conversion date. As of
September 7, 2000, the variable conversion price was $0.24 per share. The
conversion price and the number of shares of common stock underlying the
Debentures are subject to adjustment for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to our common
stock.
In no event, however, will the holders of the 12% Convertible
Debentures be permitted to convert if the
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<PAGE> 18
number of shares of common stock issuable upon conversion would result in
beneficial ownership by such holder and their affiliates of more than 9.99% of
the outstanding shares of common stock of the
The Debentures are secured by the grant of a security interest in all
of our assets, subject to a senior security interest in favor of Wells Fargo
Credit, Inc., our senior lender. The Debentures are redeemable at any time by
the holders in the event we default on our obligations or covenants. Each of the
following constitutes an "Event of Default" pursuant to the terms of the
Debenture:
- We default in the payment of principal or interest on the
Debentures and continue to do so for a period of five business
days;
- Any of the representations or warranties that we make in the
Debentures, the Securities Purchase Agreement, the
Registration Rights Agreement or in any certificate or
financial or other written statements that we furnish in
connection with the sale of the Debentures are deemed to be
false or misleading in any material respect at the time made;
- We fail to authorize or to cause our transfer agent to issue
shares of common stock upon exercise by the holder of the
conversion rights in accordance with the terms of the
Debentures, fail to transfer or to cause our transfer agent to
transfer any certificate for shares of common stock issued to
the holder upon conversion of the Debentures and when required
by the Debentures or the Registration Rights Agreement, and
such transfer is otherwise lawful, or fail to remove any
restrictive legend on any certificate or fail to cause our
transfer agent to remove such restricted legend, in each case
where such removal is lawful, as and when required by the
Debentures, or the Registration Rights Agreement, and any such
failure continues uncured for five business days;
- We fail to perform or observe, in any material respect, any
other covenant, term, provision, condition, agreement or
obligation of the Debentures and such failure continues
uncured for a period of 30 days after written notice from the
holder;
- We fail to perform or observe, in any material respect, any
covenant, term, provision, condition, agreement or obligation
under the Securities Purchase Agreement or the Registration
Rights Agreement and such failure continues uncured for a
period of 30 days after written notice from the holder (other
than a failure to cause the registration statement to become
effective no later than the required effective date, as
defined and provided in the Registration Rights Agreement, as
to which no such cure period shall apply);
WARRANTS
We issued warrants in connection with the offering of our Series A,
Series B and Series C Convertible Preferred Stock as well as our 12% Convertible
Debentures. We issued warrants to purchase 372,967 shares of common stock to the
Series A Convertible Preferred Stockholders, of which 300,000 have been
exercised, warrants to purchase 250,000 shares of common stock to the Series B
Convertible Preferred Stockholders, all of which remain fully exercisable,
warrants to purchase 1,642,106 shares of common stock to the Series C
Convertible Preferred Stockholders, all of which remain fully exercisable, and
warrants to purchase 1,025,160 shares of common stock to the holders of our 12%
Convertible Debentures, which are the same investors as the holders of our
Series C Convertible Preferred Stock. We also issued warrants to purchase
250,000 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 shares to certain designees of
Reedland Capital Partners as partial compensation for their assistance in
placing the Series B Convertible Preferred Stock. These warrants remain fully
exercisable. The exercise price of the warrants associated with the Series A and
Series B transaction have been repriced to $1.00. The exercise price of the
warrants issued to the Series C Convertible Preferred Stockholders is $1.69 with
respect to five-sixths of the shares and $2.26 with respect to the balance of
the shares covered by the warrants. The exercise price of the warrants
associated with the 12% Convertible Debentures is equal to 105% of the market
price of our common stock as of the date of issuance, or $.643125 per share.
Finally, we issued warrants to purchase 100,000 shares of common stock, at an
exercise price of $1.69 per share, to the Series A and Series B
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<PAGE> 19
Convertible Preferred Stockholders in exchange for their waiver of certain terms
and conditions related to the issuance of the Series C Convertible Preferred
Stock. The warrants described above, representing in the aggregate the right to
purchase 2,102,573 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, the warrants associated with the Series B transaction
expire on March 9, 2005, the warrants associated with the Series C transaction
expire on June 30, 2005 and the warrants associated with the 12% Convertible
Debentures expire on August 31, 2005.
In no event will holders of the Series C warrants or the warrants
issued to the holders of our 12% Convertible Debentures be permitted to convert
if the number of shares of common stock issuable upon exercise would result in
beneficial ownership by the holder and its affiliates of more than 9.99% of the
outstanding shares of our common stock. In no event will holders of the Series A
and Series B Convertible Preferred Stockholders be permitted to exercise their
warrants if the number of shares of common stock issuable upon exercise would
result in beneficial ownership by the holder and its affiliates of more than
4.9% of the outstanding shares of our common stock.
The exercise price and number of shares of common stock issuable upon
exercise of the warrants held by the Series A, Series B and Series C Convertible
Preferred Stockholders and the holders of our 12% Convertible Debentures 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 September 6, 2000, 4,000 shares of preferred stock had
been designated Series A Convertible Preferred Stock, of which 3,973 shares were
outstanding, 2,000 shares of preferred stock had been designated Series B
Convertible Preferred Stock, all of which shares were outstanding, and 1,300
shares of preferred stock had been designated Series C Convertible Preferred
Stock, 1,230 of which 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.
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<PAGE> 20
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.
Such broker-dealers, if any, may receive compensation in the form of
discounts, concessions or commissions from the selling shareholder and/or the
purchasers of the shares of common stock for whom such broker-dealers may act as
agents to whom they may sell as principals, or both (which compensation, as a
particular broker-dealer, might be in excess of customary commissions).
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 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., Koch Investment Group Limited, Esquire Trade & Finance Inc., and
Celeste Trust Reg., 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.
We have agreed to indemnify each selling shareholder or their
transferees or assignees against certain liabilities, including liabilities
under the Securities Act of 1933, or to contribute to payments to which such
selling shareholder or its pledgees, donees, transferees or other successors in
interest may be required to make in respect thereof.
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
16
<PAGE> 21
- 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 incorporated in this prospectus
by reference to our annual report on Form 10-KSB for the fiscal year ended
January 1, 2000 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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.
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 Quarterly Reports on Form 10-QS/A for the fiscal quarter
ended April 1, 2000 and on Form 10-QS/A for the fiscal
quarter ended July 1, 2000;
- our Proxy Statement for the 2000 Annual Meeting of
Stockholders, dated June 20, 2000;
- our Current Reports on Form 8-K, including Exhibits, filed
March 24, 2000, June 22, 2000, July 20, 2000, August 21, 2000,
August 23, 2000, and September 7, 2000;
- 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.
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<PAGE> 22
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
18
<PAGE> 23
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses in connection with the
issuance and distribution of the securities being registered, all of which will
be paid by Titan:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee $ 1,000
Nasdaq Listing Fee $ 7,500
Legal Fees and Expenses $ 5,000
Accounting Fees and Expenses $ 5,000
Transfer Agent Fees and Expenses $ 2,000
Miscellaneous $ 5,000
-------
TOTAL $25,500
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection 2 of Section 78.7502 of Chapter 78 of the Nevada Revised
Statutes (the "NRS") empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction or upon
a plea of nolo contendere or its equivalent does not, of itself, create a
presumption that the person did not act in good faith or in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation or that, with respect to any criminal action or proceeding, he had
reasonable cause to believe his actions were unlawful.
Subsection 2 of Section 78.7502 of the NRS empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted under similar
standards to those described above expect that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation or for amounts paid in settlement to
the corporation unless and only to the extent that the court in which such
action or suit was brought determines that, despite the adjudication of
liability, such person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 78.7502 of the NRS further provides that to the extent a
director or officer of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (1) and (2) or in the
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Section 78.751 of the NRS provides that any
indemnification provided for by Section 78.7502 of the NRS (by court order or
otherwise) shall not be deemed
19
<PAGE> 24
exclusive of any other rights to which the indemnified party may be entitled and
that the scope of indemnification shall continue as to directors, officers,
employees or agents who have ceased to hold such positions, and to their heirs,
executors and administrators. Section 78.752 empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such whether or not
the corporation would have the power to indemnify him against such liabilities
under Section 78.7502.
Article 4.2 of our Articles of Incorporation provide that no director
or officer of ours shall be personally liable to us or any of our stockholders
for damages for breach of their fiduciary duty as a director or officer. This
provision, however, does not eliminate or limit the liability of our directors
or officers for:
- acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or
- the payment of distributions in violation of Nevada Revised
Statutes Section 78.300.
Article VI of our bylaws provides for the indemnification of our
directors, officers, employees and agents in a manner substantially identical in
scope to that permitted under Section 78.7502 of the Nevada Revised Statutes.
The Bylaws provide that the expenses of officers and directors incurred in
defending any civil or criminal action, suit or proceeding shall be paid by us
as they are incurred and in advance of the final disposition of the action, suit
or proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1 Restated Articles of Incorporation of the Company (incorporated by
reference form Form 10-SB (Film No. 98648988) filed with the Commission
on June 16, 1998).
3.2 By-laws of the Company as amended and restated (incorporated by
reference to Exhibit 3 to the Company's current report on Form 8-K
filed October 1, 1999).
4.1 Debenture issued to Esquire Trade & Finance, Inc. and Celeste Trust
Reg. on August 14, 2000 (incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K filed August 21, 2000).
4.2 Warrant issued to Esquire Trade & Finance, Inc. and Celeste Trust Reg.,
on August 14, 2000 (incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed August 21, 2000.)
4.3 Registration Rights Agreement with Esquire Trade & Finance Inc. and
Celeste Trust Reg., dated as of August 14, 2000 (incorporated by
reference to Exhibit 4.3 to the Company's Current Report on Form 8-K
filed August 21, 2000).
4.4 Security Interest and Pledge Provisions, dated as of August 14, 2000,
by and among the Company, Esquire Trade & Finance, Inc. and Celeste
Trust Reg. (incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K filed August 21, 2000).
5 Opinion of James, Driggs, Walch, Santoro, Kearney, Johnson & Thompson
regarding legality.
10.1 Securities Purchase Agreement with Esquire Trade & Finance Inc. and
Celeste Trust
</TABLE>
20
<PAGE> 25
<TABLE>
<CAPTION>
<S> <C>
Reg., dated as of August 14, 2000 (incorporated by reference to Exhibit
10.1 to the Company's Current Report on Form 8-K filed August 21,
2000).
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of James, Driggs, Walch, Santoro, Kearney, Johnson & Thompson
(included in Exhibit 5).
24 Power of Attorney (included on signature page of registration
statement).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's Annual Report under Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report under Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
21
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on September 14, 2000.
TITAN MOTORCYCLE CO. OF AMERICA
/s/ Francis S. Keery
-----------------------------------------
Francis S. Keery, Chairman of the Board of
Directors and Chief Executive Officer
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Francis S. Keery, Robert P. Lobban,
Patrick Keery, and Barbara S. Keery, and each of them, his true and lawful
attorneys-in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all amendments to this registration statement on
Form S-3 and to sign any registration statement for the same offering that is to
be effective upon filing pursuant to Rule 462(b) of the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting under
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises as fully and to all intents and purposes as he might
or could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
.SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Francis S. Keery Chairman of the Board of Directors and Chief September 14, 2000
----------------------------------------
Francis S. Keery Executive Officer (Principal Executive Officer)
/s/ Robert P. Lobban Chief Financial Officer (Principal Financial September 14, 2000
----------------------------------------
Robert P. Lobban Officer and Principal Accounting Officer)
/s/ Patrick Keery President and Director September 14, 2000
----------------------------------------
Patrick Keery
/s/ Barbara S. Keery Vice President, Secretary and Director September 14, 2000
----------------------------------------
Barbara S. Keery
</TABLE>
22
<PAGE> 27
***INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1 Restated Articles of Incorporation of the Company (incorporated by
reference form Form 10-SB (Film No. 98648988) filed with the Commission
on June 16, 1998).
3.2 By-laws of the Company as amended and restated (incorporated by
reference to Exhibit 3 to the Company's current report on Form 8-K
filed October 1, 1999).
4.1 Debenture issued to Esquire Trade & Finance, Inc. and Celeste Trust
Reg. on August 14, 2000 (incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K filed August 21, 2000).
4.2 Warrant issued to Esquire Trade & Finance, Inc. and Celeste Trust Reg.,
on August 14, 2000 (incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed August 21, 2000.)
4.3 Registration Rights Agreement with Esquire Trade & Finance Inc. and
Celeste Trust Reg., dated as of August 14, 2000 (incorporated by
reference to Exhibit 4.3 to the Company's Current Report on Form 8-K
filed August 21, 2000).
4.4 Security Interest and Pledge Provisions, dated as of August 14, 2000,
by and among the Company, Esquire Trade & Finance, Inc. and Celeste
Trust Reg. (incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K filed August 21, 2000).
5 Opinion of James, Driggs, Walch, Santoro, Kearney, Johnson & Thompson
regarding legality.
10.1 Securities Purchase Agreement with Esquire Trade & Finance Inc. and
Celeste Trust Reg., dated as of August 14, 2000 (incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
filed August 21, 2000).
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of James, Driggs, Walch, Santoro, Kearney, Johnson & Thompson
(included in Exhibit 5).
24 Power of Attorney (included on signature page of registration
statement).
</TABLE>
