SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 3, 2004
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GIANT MOTORSPORTS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 000-50243 33-1025552
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(State or Other (Commission File (IRS Employer
Jurisdiction Incorporation) Number) Identification Number)
13134 State Route 62, Salem, Ohio 44460
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(Address of Principal Executive Office)
(330) 332-8534
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Registrant's telephone number, including area code
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(Former name or former address, if changed since last report)
Item 2. Acquisition of Assets.
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Pursuant to an Asset Purchase Agreement (the "Asset
Agreement"), dated as of April 30, 2004 by and among Giant
Motorsports, Inc. (the "Company"), King's Motorsports, Inc.
("King") d/b/a Chicago Cycle ("Chicago Cycle"), Jason Haubner and
Jerry Fokas, the shareholders of Chicago Cycle, the Company
acquired (the "Acquisition"), substantially all of the assets of
Chicago Cycle (the "Acquired Assets"). In consideration for the
Acquired Assets and pursuant to the Asset Agreement, the Company
(i) assumed certain specified liabilities of Chicago Cycle, and
(ii) agreed to pay to Chicago Cycle $2,925,000, as follows: (a)
$1,250,000 at the closing of the Acquisition (the "Initial
Payment"), and (b) $1,675,000 through the issuance to Chicago
Cycle of a 6% $1,675,000 aggregate principal amount promissory
note (the "Note"). The principal amount of the Note matures as
follows: (i) $500,000 on July 29, 2004, (ii) $250,000 on October
27, 2004, and (iii) the remaining $925,000, plus accrued but
unpaid interest on April 30, 2005. The Note is secured by a
second lien on the Acquired Assets pursuant to a Commercial
Security Agreement dated as of April 30, 2004, by and among the
Company and Chicago Cycle, and guaranteed pursuant to a Guaranty
dated April 30, 2004 by and among Chicago Cycle, the Company,
Russell Haehn and Gregory Haehn, the current executive officers,
directors and controlling shareholders of the Company (each a
"Control Person," and, collectively the "Controlling Persons").
To fund the $1,250,000 Initial Payment, the Company pursuant
to a Term Note dated March 12, 2004, by and among the Company and
The Fifth Third Bancorp Bank (the "Bank") borrowed $1,250,000
(the "Loan") from the Bank. The Loan matures on May 31, 2004, and
bears interest at the rate of prime plus one percent (1%) per
annum. The Company's payment obligations under the Loan are
guaranteed by the Company Persons pursuant to a Secured
Continuing Guaranty Unlimited dated as of March 12, 2004 by each
Company Person and the Bank. The Loan is also secured pursuant to
a Security Agreement dated March 12, 2004 by and between the Bank
and the Company, by a first priority lien on all of the assets of
the Company (including, but not limited to, the Acquired Assets).
In connection with the Acquisition and pursuant to the Asset
Purchase Agreement, the Company entered into a Noncompetition
Agreement ("Noncompetition Agreement"), dated April 30, 2004 with
Mr. Haubner, pursuant to which Mr. Haubner agreed to limit his
business activities to those not competing with Chicago Cycle
until December 31, 2006. In consideration for the Noncompetition
Agreement, the Company agreed to (i) pay to Mr. Haubner a monthly
fee of $20,833 from January 20, 2005 through December 31, 2006,
and (ii) provide Mr. Haubner with certain health insurance
coverage.
Pursuant to an Employment Agreement ("Employment
Agreement"), dated April 30, 2004 between the Company and Jerry
Fokas (the "Employee"), the Company agreed to employ Mr. Fokas as
a sales manager for a two (2) year period. In consideration for
such employment, the Company agreed to, among other things, pay
to the Employee (i) a salary of $2,500 per week from May 1, 2004
to April 30, 2005, and $3,000 per week from May 1, 2005 to April
30, 2006, and (ii) a quarterly bonus equal to five percent (5%)
of Chicago Cycle's quarterly earnings before interest, taxes,
depreciation and amortization (as determined by the certified
public accounting firm that regularly provides accounting
services to Chicago Cycle and/or the Company).
2
Pursuant to a Management Agreement dated April 30, 2004, by
and among the Company and Chicago Cycle, in the event the Company
does not receive dealership franchise approvals and floor plan
financing by approximately August 30, 2004, then the Company has
the right to require Chicago Cycle to repurchase the Acquired
Assets for $1,675,000.
Chicago Cycle is a privately-held retailer of Honda, Yamaha,
Suzuki and Ducati (the "Manufacturers") motorcycles, ATVs and
related powersport products. Chicago Cycle operates from an
approximately 30,000 square foot facility. The Company believes
Chicago Cycle is one of the largest volume dealers in the
Midwest.
In connection with the Acquisition, the Company issued the
Press Release attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
The Company is not filing the financial statements or pro
forma financial information required by this Item 7 in this
Current Report on Form 8-K, but will file such financial
statements and pro forma financial information by an amendment to
this Current Report on Form 8-K, within the time period
proscribed under the applicable SEC rules and regulations.
(c) Exhibits required by Item 601 of Regulation S-K
Exhibit No. Description
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2.1 Asset Purchase Agreement
20.1 Promissory Note
20.2 Commercial Security Agreement
20.3 Management Agreement
99.1 Press Release dated May 3, 2004
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.
GIANT MOTORSPORTS, INC.
By:/s/Gregory A. Haehn
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Gregory A. Haehn
President
Dated: May 10, 2004
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Asset Purchase Agreement
20.1 Promissory Note
20.2 Commercial Security Agreement
20.3 Management Agreement
99.1 Press Release dated May 3, 2004