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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 21, 2000
Titan Motorcycle Co. of America
(Exact Name of Registrant as Specified in Charter)
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Nevada 000-24477 86-0776876
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
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2222 West Peoria Avenue, Phoenix, Arizona 85029
(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code (602) 861-6977
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
AMENDMENT TO THE WELLS FARGO CREDIT FACILITY
On August 21, 2000 Titan and Wells Fargo Credit, Inc., Titan's senior
lender, entered into a Third Amendment to the Amended and Restated Loan and
Security Agreement in the form attached as Exhibit 10.1 to this report, pursuant
to which Wells Fargo: (1) modified certain financial covenants required to be
satisfied by Titan for the quarter ended June 30, 2000, including the minimum
net income requirement and the minimum net worth requirements, in order to
permit the application of such covenants without taking into consideration, for
certain relevant prior months, reserves and adjustments necessary for the return
of inventory from affiliated store locations, and (2) required the delivery of
certain consents to the modification by Titan's subordinated creditors. Without
these amendments Titan would not have been in compliance with the terms of the
Amended and Restated Loan Security Agreement. There can be no assurance that
Titan will be able to comply with these continuing requirements on an ongoing
basis or that Titan will be able to pay the amount due to Wells Fargo or
negotiate an extension beyond September 11, 2000.
NASDAQ DELISTING NOTIFICATION
On August 30, 2000, Titan received a letter from Nasdaq informing Titan
that its common stock had failed to meet the minimum bid price of $1.00 over the
preceding 30 consecutive trading days, and that, as a result, Titan did not meet
the maintenance criteria for continued listing on the Nasdaq SmallCap Market.
Pursuant to the letter, Nasdaq has provided Titan 90 days to comply with the
minimum bid price requirement. If Titan is unable to comply by November 28,
2000, its common stock will be delisted at the opening of business on November
30, 2000.
As described in a previous report on Form 8-K filed on July 20, 2000,
Titan has already been notified by Nasdaq that it is not in compliance with
other continued SmallCap Market criteria. Specifically, Nasdaq noted that Titan
did not have either $2 million in net tangible assets, $35 million of market
capitalization or $5 million in net income. Nasdaq also inquired into the
reasons for Titan's auditors rendering a going concern opinion in connection
with Titan's 1999 financial statements, which (together with the opinion) were
filed in its Form 10-KSB for the year-ended December 31, 1999. Subsequent to
Nasdaq's notification, Titan's preferred stockholders agreed to modify the terms
of their preferred stock so that the preferred stock would be characterized
under generally accepted accounting principles as equity rather than as
mezzanine instruments, which has had the effect of increasing our net tangible
assets. Titan has also advised Nasdaq that the going concern opinion issued by
its auditors arose principally out of the fact that its primary financing
source, its line of credit with Wells Fargo Business Credit, was to come due on
April 10, 2000, and at year-end the Company did not have another facility
available to refinance this debt. Coupled with Titan's losses from operations,
the auditors determined that a going concern opinion was appropriate. Although
Titan has received an extension of its credit facility with Wells Fargo, there
can be no assurance that Titan will be able to secure a replacement credit
facility by the termination date. As of the date of this report, Nasdaq had not
determined whether Titan's plan of compliance was acceptable to maintain its
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Nasdaq listing. As a result, it is unsure whether Nasdaq will take action to
delist the Company's securities and, if so, what the timing of such an action
would be.
If the Company fails to maintain its Nasdaq SmallCap Market listing for
its securities, trading in its stock is likely to be materially adversely
effected. Among other things, the Company's common stock would then constitute
"penny stock," which would place increased regulatory burden upon brokers,
making them less likely to make a market in the stock.
In addition, if Titan is delisted, it will constitute a default under the
terms of the Securities Purchase Agreements covering the 12% Convertible
Debentures and the Series A, Series B and Series C Convertible Preferred Stock
previously issued by Titan. As a result, Titan may be required to redeem the
Debentures or the Convertible Preferred Stock at a time when it does not have
sufficient funds to do so. In this case, Titan may be forced into liquidation or
reorganization under the federal bankruptcy laws.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
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EXHIBIT
NUMBER DESCRIPTION
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10.1 Third Amendment to Amended and Restated Loan and Security Agreement
dated as of August 21, 2000 by and between the Company and Wells
Fargo Credit, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Titan Motorcycle Co. of America
/s:/Francis S. Keery/
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Francis S. Keery
Chief Executive Officer
Dated: September 7, 2000
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Exhibit Index
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EXHIBIT
NUMBER DESCRIPTION
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10.1 Third Amendment to Amended and Restated Loan and Security Agreement
dated as of August 21, 2000 by and between the Company and Wells
Fargo Credit, Inc.
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