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TITAN MOTORCYCLE CO OF AMERICA INC
Form: S-3 Filing Date: 4/21/2000 Filing Index
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As Filed With The Securities And Exchange Commission On April 21, 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
---------------------------
TITAN MOTORCYCLE CO. OF AMERICA
(Exact name of registrant as specified in its Charter)
NEVADA 86-0776876
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2222 WEST PEORIA AVENUE
PHOENIX, ARIZONA 85029
(602) 861-6977
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
-------------------------------
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)
-------------------------------
COPY TO:
STEVEN D. PIDGEON, ESQ.
SNELL & WILMER L.L.P.
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6000
--------------------------------
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. [ ]
<PAGE> 2
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. [ ]
<PAGE> 3
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 2,502,500 Shares(1) $ 1.406(2) $ 3,518,515.00 $ 928.89
Total 2,502,500 Shares(1) $ 3,518,515.00 $ 928.89
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(1) Shares of common stock that may be offered pursuant to this Registration
Statement consist of 2,240,000 shares issuable upon conversion of 2,000 shares
of Series B Convertible Preferred Stock and 262,500 shares issuable upon
exercise of certain warrants. For purposes of estimating the number of shares of
common stock to be included in this Registration Statement, we calculated (i)
175% of the number of shares of common stock issuable in connection with the
conversion of the Series B Convertible Preferred Stock, determined as if the
Series B Convertible Preferred Stock, together with twenty-four months of
accrued and unpaid dividends thereon (Series B Convertible Preferred Stock
holders are entitled to dividends, if declared by the Board, at a rate of $60.00
per year per share), were converted in full at the fixed conversion price of
$1.75 on the date this Registration Statement is first filed 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 April 18, 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.
<PAGE> 4
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
2,502,500 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 12.
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 sales price of our common stock as reported by the
Nasdaq SmallCap Market on April 18, 2000 was $1.50 per share.
-----------------------------
BEFORE PURCHASING ANY OF THE SHARES COVERED BY THIS PROSPECTUS, 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 ALL OF YOUR
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 _______ ___, 2000.
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TABLE OF CONTENTS
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Page
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TITAN MOTORCYCLE CO. OF AMERICA.................................................................................. 1
RISK FACTORS..................................................................................................... 1
FORWARD LOOKING STATEMENTS....................................................................................... 6
USE OF PROCEEDS.................................................................................................. 8
SELLING STOCKHOLDERS............................................................................................. 8
DESCRIPTION OF SECURITIES........................................................................................ 9
PLAN OF DISTRIBUTION............................................................................................. 12
LEGAL OPINIONS................................................................................................... 13
EXPERTS.......................................................................................................... 13
WHERE YOU CAN FIND MORE INFORMATION.............................................................................. 13
</TABLE>
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 THE
DOCUMENTS.
<PAGE> 6
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 61 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 $20,000 to $25,000.
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 ALL OF YOUR INVESTMENT.
WE HAVE A HISTORY OF LOSSES AND WE MAY LOSE MONEY IN THE FUTURE
Although we earned $237,479 in net income for the fiscal year 1998, we
incurred losses of $257,463 in fiscal year 1995, $95,496 in fiscal year 1996 and
$1.7 million in 1997. In the fiscal year 1999 we incurred losses of $8,060,282.
We expect to incur further losses in the first quarter of 2000 and may continue
to incur losses thereafter. Given our history of losses, we cannot assure you
that we will ever be profitable.
WE MAY BE UNABLE TO REGAIN PROFITABILITY IF WE DO NOT GENERATE AN INCREASE IN
CONSUMER DEMAND FOR OUR PRODUCTS
To regain profitability, we 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:
- increase consumer awareness of our products;
- establish a reputation for high quality;
- increase sales through our independent third party dealers;
and
- expand our dealer network.
We cannot assure you that we will meet these objectives.
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COMPLICATIONS IN THE ESTABLISHMENT AND INTEGRATION OF OUR NEW "PHOENIX BY TITAN"
LINE OF MOTORCYCLES COULD MATERIALLY ADVERSELY AFFECT OUR EXPENSES, GROSS
MARGINS AND OPERATING RESULTS
We recently introduced our "Phoenix by Titan" line of heavyweight
motorcycles. 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 start up difficulties that we may experience;
- successfully adapt to an assembly line manufacturing process; and
- gain or maintain consumer acceptance of this product line.
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 in introducing this line. Any of these issues could
materially adversely affect our expenses, gross margins and operating results.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO SUCCESSFULLY IMPLEMENT OUR NEW
MANAGEMENT INFORMATION SYSTEM WHICH COULD RESULT IN A DISRUPTION OF OUR BUSINESS
AND COULD HAVE A NEGATIVE AFFECT ON OUR OPERATIONS
We recently installed a new management information system. This system
will monitor our inventory, production, billing and other operational aspects of
our business. We cannot assure you that we will be able to successfully operate
and utilize this new system which could result in a disruption of our business
and could have a negative affect on our operations.
WE SELL A DISCRETIONARY PRODUCT AND 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 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;
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- Excelsior-Henderson, which recently entered the market with their
"Super X" model; and
- Polaris, which recently entered the market with their "Victory V92C"
model.
OUR PRODUCTS COULD CONTAIN DEFECTS CREATING PRODUCT RECALLS AND WARRANTY CLAIMS
WHICH 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 could negatively impact
the goodwill and quality associated with our name. Defects could also give rise
to litigation which could result in our liability for judgments which 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 ARE SUBJECT TO CONTINGENT LIABILITIES UNDER A DEALER FLOOR PLAN FINANCING
PROGRAM WHICH COULD EXPOSE US TO SIGNIFICANT FINANCIAL OBLIGATIONS
Approximately 51 of our dealers receive floor plan financing for our
products through TransAmerica Commercial Finance Corporation, Deutsche Financial
Services or Bombardier Financial. The dealers are the obligors under these floor
plan agreements and are responsible for all principal and interest payments.
However, we are subject to a standard repurchase agreement which 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. While
we have only had to repurchase less than $700,000 worth of our motorcycles since
August of 1997, as of February 29, 2000, total outstanding obligations of all 51
dealers was approximately $13,800,000. Our profitability would be significantly
negatively impacted if we were forced to repurchase a large number of these
motorcycles.
WE MAY NOT BE ABLE TO RAISE THE ADDITIONAL CAPITAL REQUIRED TO EXECUTE OUR
BUSINESS PLAN
We expect to continue to incur significant capital expenses in
continuing to expand our production lines, introduce new product lines and
increase unit capacity. Additional financing may not be available on terms
favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to execute our business plan
or take advantage of our business opportunities. In addition, if we elect to
raise capital by issuing additional shares of stock, existing stockholders may
incur dilution.
A LARGE PORTION OF OUR REVENUE COMES FROM A SMALL NUMBER OF CUSTOMERS, THE LOSS
OF WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR OPERATING RESULTS
Francis S. Keery, our Chief Executive Officer, and Patrick Keery, our
President, each own 33% of BPF Holdings, LLC, which currently owns four
motorcycle retail stores which are Titan dealers and carry our products. The
four stores are: Titan of Phoenix, Titan of Los Angeles, Titan of Las Vegas and,
most recently, Titan of Houston. In 1999, approximately 23.3% of the Company's
sales were to BPF-owned stores. The loss of the BPF dealerships would have a
material adverse affect on our operating results.
WE DEPEND HEAVILY ON THIRD PARTY PARTS SUPPLIERS AND ANY SIGNIFICANT ADVERSE
VARIATION IN QUANTITY, QUALITY OR COST WOULD NEGATIVELY AFFECT OUR OPERATIONS
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.
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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 which may adversely affect the value of goods
purchased;
- trade restrictions;
- 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 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
Failures by independent third party dealers to adequately promote our
products could negatively affect our results of operations. 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.
OUR GROWTH DEPENDS ON OUR ABILITY TO EXPAND OUR DISTRIBUTION NETWORK AND SUPPORT
DEALERS AND WE CANNOT ASSURE YOU THAT THIS STRATEGY WILL BE SUCCESSFUL
We plan to expand our dealer network to implement our growth strategy.
We cannot assure you that we will be able to attract additional dealers or that
these dealers will be successful in selling our products.
We plan to support our dealers in the following ways:
- facilitating floor plan financing and incentives;
- providing continuing education about our products;
- supplying parts and accessories; and
- providing training to sales and service personnel.
Any difficulties in the continued execution of this plan may cause us
to lose dealers or experience difficulties in attracting new dealers and could
cause the distribution of our products to be adversely affected.
WE ARE ATTEMPTING TO ESTABLISH SALES OPERATIONS IN FOREIGN MARKETS WHICH
REQUIRES SIGNIFICANT MANAGEMENT ATTENTION AND FINANCIAL RESOURCES AND THIS
STRATEGY MAY NOT BE SUCCESSFUL
We are attempting to establish sales operations in foreign markets, and
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;
- parts availability;
- changes in diplomatic and trade relationships;
- tariffs;
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- currency exchange rate; and
- unexpected changes in regulatory requirements.
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 FINANCIAL CONDITION AND OUR ABILITY TO FULLY IMPLEMENT OUR EXPANSION PLANS
COULD BE NEGATIVELY IMPACTED IF WE FAIL TO EFFECTIVELY MANAGE OUR GROWTH
Our rapid growth has placed, and is expected to continue to place, a
significant strain on our managerial and operational resources. Our failure to
effectively manage our growth could negatively impact our operations. Our
ability to support future growth will depend on our ability to find qualified
employees and suitable expansion space for our manufacturing operations and
improving our managerial and production capabilities. We cannot assure you that
we will be able to continue to manage future growth successfully.
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.
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 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 RESULT IN THE
VOLATILITY OF 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;
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- disruptions in the supply of key components and parts;
- seasonal variations in the sale of our products; and
- general economic conditions.
WE COULD BE REQUIRED TO REDEEM OUR SERIES A AND SERIES B 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 and Series B Convertible Preferred Stock
have the right to force us to redeem their Preferred Stock at a premium upon the
occurrence of certain events. The redemption of our Series A or Series B
Convertible Preferred Stock would require a large expenditure of capital and we
may not have sufficient funds to satisfy the redemption. 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 or
Series B Convertible Preferred Stock, or in the event of certain defaults under
the Series A or Series B Preferred Stock, which could result in a dilution
adjustment. Any such event could adversely affect the price of our stock and
ability to raise additional capital.
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.
There are currently outstanding convertible preferred stock, warrants,
and options to acquire up to 8,810,867 additional shares of common stock. If
converted or exercised, these securities will dilute your percentage ownership
of common stock. These securities, unlike common stock, 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.
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 affect 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 which 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 business strategy, growth
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
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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
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