Wednesday, June 20, 2018

Titan Machinery Co-Founder is Company's Underwriter



MANAGEMENT HYPES GUIDANCE, Stock SkyRockets, Insiders Sell, Months Later Miss Guidance by a Miles (click here


ClearCase of  Insider Selling before News was made Public. (Click here)

click: Related Party Transactions Appear to Be Slippery


There are many related party transactions in the disclosure through out the years. Specifically $100 million worth of leases with an outside entity that management has (had) an equity stake in.  

A co founder of the company who sits on the board is also the underwriter of the public company and receives fees. Adam Smith Investments is an outside entity controlled by this Director and Adam Smith files with SEC as a Promotor.

Compare Holdings from DEF14 Proxy for Tony Christianson in Spring of 2017 vs Spring of 2018.







ACCORDING TO THIS SEC FORM D FILING
Adam Smith re Cherry Tree relationship Adam Smith Fund. According to this SEC Filing Adam Smith is disclosed as a a "PROMOTER"
CHERRY TREE payments




HOT IPO TITAN


Company also has a history of Directors leaving. Six of Eight Directors left within a 2 year period.










RELATED PARTY TRANSACTIONS






 TITAN's  MANAGEMENT OUTSIDE ENTITY BUYS PROPERTY FOR $1.00.
12 acres of commercial land for $1.00. 
Dealer Sites LLC is the property ownership company for Titan Machinery, which acquired the property from the city for $1 and will lease it to its operating company, Titan. 
link to article: 


TITAN SELLS PROPERTY TO DEALER SITES (but there is no SEC disclosure)
Check out this article i found, it is from July 2011. (2 days before the 2nd quarter ended). 
I can't find any disclosure of this transaction in any SEC filing though.

*****What's most strange about this transaction is that TITAN purchased the Property in May and then turned around and sold it to Dealer Sites two months later for a profit. While all this real estate is trading hands, The Chairman appears on Jim Cramer's Mad Money hyping the stock and then the Chairman and CEO combined to UNLOAD $14million worth of stockWhat a Quarter these guys had. (Q2 ending July 31,2011).

 This is really too close for comfort IMO, considering Dealer Sites LLC is an entity owned in part by TITN top 2 executives. Years ago Dealer Sites was disclosed in TITN SEC documents as being owned by not only top 2 execs of TITN , but also other family relationships as well. In Recent disclosure the wording has changed to only say top 2 execs only have a minority interest and/or less than 10% interest in other disclosure.

6340 E. County Road 101, Shakopee 

Price: $2,476,734 Filing date: 7/28/2011 

*****Seller: Titan Machinery Inc.***** Buyer: Dealer Sites LLC 

Property ID: 271030010 


6340 E. County Road 101, Shakopee
Price: $2,450,000 Filing date: 5/31/2011
******Seller: St. Joseph's Equipment Inc. ********Buyer: Titan Machinery Inc.
Property ID: 271030010 



The purchase of the property from St Joseph's is in the SEC 2Q FY2011 10Q , but the sale to Dealer Sites LLC is not disclosed.
"On May 31, 2011, the Company acquired certain assets of St. Joseph Equipment Inc. The acquired entity consisted of four construction equipment locations in Shakopee, Hermantown and Elk River, Minnesota, and La Crosse, Wisconsin. The acquisition establishes the Company’s first construction equipment store in Wisconsin and allows the Company to have the exclusive Case Construction contract for the entire state of Minnesota and 11 counties in western Wisconsin. The acquisition-date fair value of the total consideration transferred for the dealerships was $17.0 million."

Titan Machinery (NASDAQ: TITN $21.78) filed a Schedule 14A (Definitive proxy statement) last night with the Securities & Exchange Commission.
·        
Certain Transactions 
        Described below are transactions and series of similar transactions that have occurred during fiscal 2013 to which we were a party or are a party in which:
the amounts involved exceeded or will exceed $120,000; and 
a director, executive officer, beneficial owner of more than five percent of any class of our voting securities or any member of their immediate family had or will have a direct or indirect material interest. 
        As of January 31, 2013, we leased real estate for 48 of our 120 stores from Dealer Sites, LLC, ("Dealer Sites") an entity in which a minority position was owned by an entity affiliated with David Meyer, our Chairman and Chief Executive Officer, an entity affiliated with Tony Christianson, one of our directors, and Peter Christianson, our President and Chief Operating Officer, and certain of their immediate family members (collectively the "Related Persons"). The collective equity ownership of the Related Persons in Dealer Sites was approximately 30% during the first 11 months of fiscal 2013. Effective December 31, 2012, the collective ownership of the Related Persons was reduced to approximately 9%, due to a purchase and sale of equity interests between certain of the Related Persons and other unaffiliated owners of Dealer Sites. The Company also entered into sale-leaseback agreements with Dealer Sites from which the Company received $1.3 million for the year ended January 31, 2013. 
        We also lease one dealership site from C.I. Farm Power Inc., an entity owned by Mr. Peter Christianson. 
        The table below states for fiscal 2013 through the end of the respective lease terms, the aggregate amount of all periodic minimum lease payments or installments made or due, including any required or optional payments due at the conclusion of the respective leases, are as follows: 
Lessor
Period 
Aggregate
Payments Made
or Due 
Dealer Sites, LLC
Fiscal 2013
$
6,899,000
Fiscal 2014, through
January 2028

$

103,047,000
C.I. Farm Power, Inc. 
Fiscal 2013

$

144,000
Fiscal 2014, through
July 2013

$

72,000
        We believe the terms of the leases to be commercially reasonable, and are not any less favorable to us than could be obtained in an arm's length transaction with an unrelated party. 
        During fiscal 2013, Ted Christianson served as our Vice President, Finance and Treasurer and received total cash compensation of approximately $333,000 and a restricted stock award of 1,012 shares of our common stock, with a grant-date fair value of $29,986. Ted Christianson is the brother of Peter Christianson, our President and Chief Operating Officer, and of Tony Christianson, a member of our Board of Directors. 
35


        During fiscal 2013, Sam Christianson, the son of Peter Christianson, was an employee of the Company and received total cash compensation of approximately $190,000 pursuant to a standard commission-based plan of compensation that is subject to annual variation. 
        Both of the above identified employees participated in employee benefits plans and programs available to our other full time employees. 
        C.I. Construction, LLC, ("CI") performs construction management services for certain of the Company's new store construction projects, shop additions, and existing facilities remodel projects. CI is owned by Rob Thompson, who is the brother-in-law of Tony Christianson, a member of our Board of Directors, and Peter Christianson, a member of our Board of Directors and our President and Chief Operating Officer. CI is responsible for developing designs/specifications, drawings, bid packages, advising on the selection of suppliers and contractors, and overseeing the construction process. CI is also an authorized reseller of certain building materials that the Company generally incorporates into its new construction and certain remodeling projects. 
        CI receives a fee equal to 4.5% of the construction costs, excluding expenditures for certain fixtures and fixed assets that the Company originates. CI is also reimbursed for the labor costs of CI's site supervisors and on-site staff, and utilities, equipment rental, travel, and other direct costs incurred by CI in performing the services. CI also receives payment as a reseller of certain building materials used in its construction projects. 
        During fiscal 2013, CI received an aggregate amount of $6.7 million in direct or indirect payments from the Company for the above construction-related services and product resales, as well as reimbursement for other construction-related costs. We do not believe the terms of any of the transactions and agreements described above are any less favorable to us than could be obtained in an arm's length transaction with an unrelated party. 
        During fiscal 2013, Cherry Tree Companies, LLC, an entity controlled by Tony Christianson, a member of our Board of Directors, received aggregate compensation of $173,000, consisting of a one-time payment of $113,000 pursuant to compensation paid to the underwriters in our April 2012 convertible note offering and a $5,000 per month payment for consulting services rendered to the Company. We do not believe the terms of our consulting or underwriter compensation arrangements with Cherry Tree Companies, LLC were any less favorable to us than could be obtained in an arm's length transaction with an unrelated party. 

*******If you look below at the April 2012 DEF Proxy Disclosure and compare it to the 2013 proxy disclosure above, you'll notice that TITN entered into an additional $50million worth of lease contracts (bringing total to over $100million) with the entity Dealer Sites LLC which is an entity that is owned in part to the top 2 Execs at TITN. What really raises an even bigger Red Flag is that TITN only increased locations owned by Dealer Sites by 2, 46 to 48 locations, but added over $50 million in leases agreements! there was no disclosure of the additional lease arrangements in the 10K filed less than 3 weeks ago. did all these lease agreements get done over the last 3 weeks?

A close look at C&I Farm Power lease looks fuzzy too. The dates (time frames) don't add up and the payment has been reduced from (changed) to $216,000 (below '12) down to $72,000 (above '13). Was $144,000 paid to C&I?

2012 DEF14 Proxy Statement 
o    The table below states for fiscal 2012 through the end of the respective lease terms, the aggregate amount of all periodic payments or installments made or due, including any required or optional payments due at the conclusion of the respective leases, are as follows:
Lessor
Period
Aggregate
Payments
Made or Due
Dealer Sites, LLC
Fiscal 2012
$
6,196,986
Fiscal 2013, through
January 2027
$
51,424,827
C.I. Farm Power, Inc. 
Fiscal 2012

$

144,000
Fiscal 2013, through
July 2013
$
216,000