A ZSUN Co-Stable Company, TMOT annual meeting: "Notes from today's shareholder meeting.
by: nomorework99 (39/M/Phoenix, AZ) 7/26/00 3:12 pm
Msg: 2983 of 2987
The following are my notes from the meeting. While I believe that I captured the output of the meeting accurately, I
make no guarantees as to the accuracy of any of my notes. At this time, I will simply dictate my notes and will not offer any opinions on any of the matters discussed.
Meeting was called to order at 9:00am at Camelback Inn in Phoenix, Arizona.
Titan was represented by Frank and Patrick Keery and Bob Lobban (CFO).
I believe Barbara Keery was also in attendance and outside directors Tony Turner and Harry Birkenruth were also
present.
There were only about 15-20 people present at the meeting, including about five from Titan and the two outside
directors. Attendees were very subdued and were actually quite easy on Frank.
FYI – Patrick’s arm was in a cast. Frank said he broke it in an arm wrestling match and it required surgery to repair.
All three matters under vote were ratified by quorum of shareholders. This included election of directors, ratification
of Price Waterhouse and authorization of issuance of shares. 13 million+ shares were represented at the meeting out
of 17 million+ shares outstanding
Frank then commented on the current state of affairs at Titan:
Titan is in the middle of a difficult period, financially, but major fundamentals are still good. This includes one of the
strongest, recognized names in the industry, second only to Harley Davidson. Still believe that they have a team of
loyal, dedicated employees in place.
Now have three lines of Titan motorcycles
1) High line (Gecko, etc.) $30k+
2) Mid line (upgraded Phoenix) $25k
3) Phoenix $20k
Primary problem facing Titan now is their inability to refinance existing debt. Have reduced outstanding balance with
existing loan holder (Wells Fargo?) from $10 million to $5.5 million since the beginning of the year. Plan is to continue
to reduce this outstanding balance through internal cash. They plan to generate the cash by reducing production
volumes and bringing costs down (i.e. layoffs, etc.). Headcount reduction last week took them from 181 to 136
employees. By reducing production volumes, they can lower inventories and pay loan balances down. Sales projects
will be lowered accordingly and will be easier to hit. With a more manageable production level, it is easier to manage
debt.
Shareholder meeting notes - page 2
by: nomorework99 (39/M/Phoenix, AZ) 7/26/00 3:13 pm
Msg: 2984 of 2986
Questions/discussion
1) Expenses increased 2.5x from 1998 to 1999, but number of units sold in 1999 actually decreased. Why ? Frank –
Net sales increased from $13 million to $27 million between 1997 and 1998. Between 1998 and 1999, plan was to
double this again through increased production funded by secondary stock offering. Secondary was never completed
(Asia crisis cited as one reason), had completed plans for this 2x growth, but without secondary funding, expenses
increased and production levels did not.
2) Is company going to stay in business. Frank – Much effort dedicated to insuring that company survives.
3) Financing status. Frank – Requests sent to 20-25 lending sources. Three have gone beyond initial proposal. One
still in the running. Current plan to stay in business doesn’t mandate that a new lender be found. Frank believes that
by continuing to reduce expenses, can drive business to cash flow positive and reduce outstanding loan to zero.
However, other financing options continue to be pursued. Existing line of credit outstanding balance has been reduced
from $9.8 million on 1/1/2000 to about $5.5 million today.
4) How many dealers ? Frank – 60 domestic dealers. Of these, about 10 are exclusive Titan dealers.
5) Company owned stores. Frank – Keery family, along with private investors, owned four stores. One each in
Phoenix (Indian School), Las Vegas, LA and Houston. These four stores account for 23% of total Titan sales.
Phoenix store alone counts for ½ of this 23%. Operating these stores in absentee has cost Keery’s and their private
investors a seven figure loss. Keery’s can’t continue to own and run these stores at the same time they are trying to
keep Titan afloat. Therefore, they are selling the Vegas, LA and Houston stores. All three of these will remain Titan
dealers. The LA store will carry both Titan and Indian motorcycles. The Phoenix store will remain open and they are
considering relocating it to Scottsdale Airpark.
6) Vendor relationships. Frank – We believe we will continue to get the parts we need from existing vendors. Still on
terms with all major suppliers. They are on COD only terms with some of the smaller vendors. Major suppliers still
providing parts and Frank believes that they still have strong goodwill with these suppliers.
7) Goal of profitability. Frank – Profitable from operating view in March, April and May of this year. Plan to continue
to reduce operating expenses and production to become profitable.
8) NASDAQ delisting. Frank’s response simply echoed what was in last week’s 8K filing.
All in all, it was a surprisingly subdued meeting. |
