UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended January 31, 1998 or [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______ Commission file number 0-8485 Grip Technologies, Inc. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) California 95-1980894 - -------------------------------------------------------------------------------- (State of incorporation) (I.R.S. employer identification number) 10 Corporate Park, Suite 130 Irvine, California 92606-5140 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (714) 252-8500 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The number of shares outstanding of the Registrant's Common Stock as of March 16, 1998: 6,187,592 INDEX PART I FINANCIAL INFORMATION PAGE Item 1. Consolidated Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Operations 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II OTHER INFORMATION Item 2. Changes in Securities 13 Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 17 2 GRIP TECHNOLOGIES, INC. AND SUBSIDIARY -------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- ASSETS ------ January 31, July 31, 1998 1997 ----------- ---------- (Unaudited) CURRENT ASSETS: Cash $ 7,615 $ 107,531 Accounts receivable, net of allowance for doubtful accounts of $41,069 at January 31, 1998 and $70,070 at July 31, 1997 383,963 357,395 Inventories 634,556 493,466 Other current assets 55,124 38,231 ---------- ---------- Total current assets 1,081,258 996,623 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $976,714 at January 31, 1998 and $800,501 at July 31, 1997 698,171 721,021 INTANGIBLES, net of accumulated amortization of $468,094 at January 31, 1998 and $1,123,066 at July 31, 1997 925,555 1,024,844 ---------- ---------- Total assets $2,704,984 $2,742,488 ========== ========== The accompanying notes are an integral part of these consolidated financial statements 3 GRIP TECHNOLOGIES, INC. AND SUBSIDIARY -------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- January 31, July 31, 1998 1997 ----------- ------------- (Unaudited) CURRENT LIABILITIES: Current portion of long-term obligations $ 1,321,997 $ 1,326,019 Notes payable to stockholders 1,326,960 716,960 Short-term borrowings -- 10,000 Accounts payable 572,481 515,262 Accrued liabilities 259,643 209,826 ----------- ----------- Total current liabilities 3,481,081 2,778,067 LONG-TERM OBLIGATIONS, net of current portion 935,756 963,545 ----------- ----------- Total liabilities 4,416,837 3,741,612 ----------- ----------- STOCKHOLDERS' EQUITY (DEFICIT): Series A convertible preferred stock Authorized -- 3,000,000 shares Issued and outstanding -- 875,000 shares at January 31, 1998 and 887,500 shares at July 31, 1997 875,000 887,500 Common stock Authorized -- 25,000,000 shares Issued and outstanding -- 6,187,592 shares at January 31, 1998 and 6,061,092 shares at July 31, 1997 5,986,415 5,913,415 Accumulated deficit (8,573,268) (7,800,039) ----------- ----------- Total stockholders' equity (deficit) (1,711,853) (999,124) ----------- ----------- Total liabilities and stockholders' equity (deficit) $ 2,704,984 $ 2,742,488 =========== =========== The accompanying notes are an integral part of these consolidated financial statements 4 GRIP TECHNOLOGIES, INC. AND SUBSIDIARY -------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- Six Months Ended Quarters Ended January 31, January 31, ----------------------- ----------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) NET SALES $1,776,340 $2,174,734 $1,062,000 $1,107,808 COST OF SALES 1,385,040 1,670,544 784,709 880,790 ---------- ---------- ---------- ---------- Gross profit 391,300 504,190 277,291 227,018 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Selling 291,782 338,143 145,742 164,885 General and administrative 405,407 339,133 228,206 166,237 Research and development 29,184 21,191 17,219 14,378 Depreciation 176,213 202,224 109,225 104,026 Intangible amortization 99,288 99,288 49,644 49,644 ---------- ---------- ---------- ---------- Total operating expenses 1,001,874 999,979 550,036 499,170 ---------- ---------- ---------- ---------- Loss from operations (610,574) (495,789) (272,745) (272,152) ---------- ---------- ---------- ---------- INTEREST AND OTHER Interest expense, net 164,596 89,914 80,198 52,131 Other income (2,741) (13,781) (836) (13,781) ---------- ---------- ---------- ---------- 161,855 76,133 79,362 38,350 ---------- ---------- ---------- ---------- Loss before income taxes (772,429) (571,922) (352,107) (310,502) PROVISION FOR INCOME TAXES 800 1,600 400 - ---------- ---------- ---------- ---------- Net loss $ (773,229) $ (573,522) $ (352,507) $ (310,502) ========== ========== ========== ========== Basic and diluted loss per share $ (0.12) $ (0.10) $ (0.06) $ (0.05) ========== ========== ========== ========== Weighted average common shares outstanding 6,187,592 5,649,316 6,187,592 5,716,708 ========== ========== ========== ========== The accompanying notes are an integral part of these consolidated financial statements 5 GRIP TECHNOLOGIES, INC. AND SUBSIDIARY -------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- Six Months Ended January 31, --------------------------- 1998 1997 ----------- ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(773,229) $(573,522) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 176,213 202,224 Amortization of intangibles 99,288 99,288 (Increase) decrease in accounts receivable (26,568) 207,826 Increase in inventories (141,090) (96,271) (Increase) decrease in other current assets (16,893) 7,226 Increase (decrease) in accounts payable 57,219 (54,358) Increase in accrued liabilities 49,817 11,036 --------- --------- Net cash used in operating activities (575,243) (196,551) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (153,363) (167,463) --------- --------- Net cash used in investing activities (153,363) (167,463) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable to stockholder 610,000 - Principal repayments of long-term obligations (31,810) (51,743) Proceeds from issuance of long-term obligations - 400,000 Net increase in amounts due stockholder - 30,400 Issuance of Common stock 60,500 - Repayments of short-term borrowings (10,000) (30,000) --------- --------- Net cash provided by financing activities 628,690 348,657 --------- --------- NET DECREASE IN CASH (99,916) (15,357) CASH, beginning of period 107,531 16,975 --------- --------- CASH, end of period $ 7,615 $ 1,618 ========= ========= The accompanying notes are an integral part of these consolidated financial statements 6 GRIP TECHNOLOGIES, INC. AND SUBSIDIARY -------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Six Months Ended January 31, ---------------------------- 1998 1997 ------------- ------------- (Unaudited) Cash paid for interest $84,600 $62,514 ======= ======= Cash paid for income taxes $ 0 $ 0 ======= ======= SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING AND FINANCING ACTIVITIES: During the first quarter of 1998, 114,000 shares of Common Stock were issued in exchange for the cancellation of a $50,000 liability for endorsement fees and a $10,500 liability for short-term borrowings and accrued interest. During the first quarter of 1998, 12,500 shares of Series A Convertible Preferred Stock were converted into 12,500 shares of Common Stock. The accompanying notes are an integral part of these consolidated financial statements 7 GRIP TECHNOLOGIES, INC. AND SUBSIDIARY -------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ JANUARY 31, 1998 ---------------- (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements include the accounts of Grip Technologies, Inc. and its subsidiary (the Company). All significant intercompany transactions have been eliminated. In the opinion of the Company's Management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company's consolidated financial position at January 31, 1998 and the consolidated results of operations and cash flows for the quarters and six months ended January 31, 1998 and 1997 have been included. The Company's fiscal year ends on July 31. References made throughout these notes to consolidated financial statements to a year without a direct reference to a quarter are references to the entire fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules of the United States Securities and Exchange Commission (SEC). These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes to consolidated financial statements for the year ended July 31, 1997 included as part of the Company's Annual Report on Form 10-K (File No. 0-8485) filed with the SEC on November 13, 1997. The consolidated results of operations for the quarter and the six months ended January 31, 1998 are not necessarily indicative of the results to be expected for the full year. 2. Net Loss Per Share Information ------------------------------ In March 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share." The new standard requires presentation of two new amounts, basic and diluted earnings per share. The company was required to retroactively adopt this standard and restate EPS for all prior periods presented in this quarter ended January 31, 1998. Basic loss per share was computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented. Potential common shares for the periods presented were not included in the net loss per share calculations as they were antidilutive. Accordingly, there was no difference in basic and diluted earnings per share. Similarly, there was no change to prior periods upon the adoption of SFAS No. 128. 3. Going Concern ------------- The Company has incurred significant net losses since its inception (August 1, 1993). As of January 31, 1998, the accumulated deficit was $8,573,268 and the stockholders' deficit was $1,711,853. The net loss for the six months of 1998 was $773,229. For the three years ended July 31, 1997, 1996 and 1995 the net loss was $1,391,541, $1,574,981 and $3,444,745, 8 respectively. From July 31, 1997 through January 31, 1998, the working capital deficit increased $618,379 to $2,399,823. The net cash used in operating and investing activities was $728,606 for the first two quarters of 1998. The net cash used in operating and investing activities was $777,699, $1,996,373 and $2,307,080 in 1997, 1996 and 1995, respectively. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. In order to provide working capital to support its operations, the Company has raised funds through trade credit, stock issuances and additional borrowings, including loans from the Company's President, who is also a major stockholder (the President). The ability of the Company to meet its existing and ongoing obligations is dependent upon raising additional capital from sources of funding, such as private placements, public offerings, a merger or banks and other lenders. The Company is currently pursuing all possible avenues it can identify to obtain additional funding. The Company has retained the services of an investment banking firm to advise and assist the Company regarding financing alternatives, as well as potential mergers and acquisitions. However, there can be no assurances that any of these transactions may be consummated in a timely manner or on terms reasonably acceptable to the Company. The Company plans to continue to develop and implement cost effective strategies it believes will increase sales and gross margins, reduce other operating expenses and eventually lead to profitability. However, the Company continues to incur losses. The ability of the Company to continue as a going concern is dependent on obtaining adequate financing and ultimately achieving profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. 4. Financing Activities and Subsequent Events ------------------------------------------ Since August 1, 1997, the President has loaned the Company $610,000 for operating funds in exchange for promissory notes secured by certain assets of the Company. Under the terms of the promissory notes, the President is currently entitled to demand repayment of the entire amount. The promissory notes bear interest at 10% which is being accrued. In October 1997, the Company granted to certain officers and employees, stock options to purchase a total of 320,000 shares of Common Stock. The exercise price of the options is $0.4375 per share. In November 1997, the Company granted to certain directors, stock options to purchase a total of 220,000 shares of Common Stock. The exercise price of the options is $0.5625 per share. The options vest over three years and expire in November 2002. Both exercise prices reflect the fair market value of the shares on the respective dates of the grants. In November 1997, the Company issued to the President a warrant to purchase 250,000 shares of Common Stock. The exercise price of the warrant is $0.5625 per share. The warrant has a term of five years. In November 1997, the Company issued to an investment banking firm a warrant to purchase up to 600,000 shares of Common Stock. The exercise price of the warrant is $1.50 per share. The warrant, a portion of which is performance based, has a term of five years and vests over two years. The warrant also includes certain anti-dilution provisions. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read together with the consolidated financial statements and notes to consolidated financial statements included elsewhere in this Report. Forward-Looking Statements - -------------------------- From time to time, the Company may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward- looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company in this Report, as well as the Company's other periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company's business include, but are not limited to, those factors set forth under the caption "Liquidity and Capital Resources" and "Notes to Consolidated Financial Statements" included in this Report. Financial Condition and Results of Operations - --------------------------------------------- The Company incurred a net loss of $352,507 or $0.06 per common share, during the second quarter of 1998 compared to a net loss of $310,502 or $0.05 per common share for the second quarter of 1997. While certain operating expenses have been significantly reduced, lower net sales, delays in finishing tooling, product processing inefficiencies, rework costs and higher labor costs contributed significantly to the net loss. Also, interest expense increased $28,067, or 54%, in the second quarter of 1998 compared to the second quarter of 1997, as a result of additional borrowings by the Company to fund operations. Net sales for the second quarter of 1998 were $1,062,000, a 4% decrease compared with net sales of $1,107,808 for the second quarter of 1997. Sales during the second quarter of 1998 to Cobra Golf (Cobra) were $692,098, or 65% of net sales. This is $94,446 less than sales to Cobra during the second quarter of 1997, which were $786,554, or 71% of net sales. Cost of sales for the second quarter of 1998 was $784,709, or 74% of net sales compared to $880,790, or 79% of net sales for the second quarter of 1997. Lower net sales negatively affected the per unit fixed production costs. Also, the Company experienced labor inefficiencies due to many factors, including delays in obtaining the required tooling for Cobra's new grip, rework activities and increased hourly rates for employees and temporary labor. The Company also incurred higher than normal costs on purchases of the new Cobra golf grips from its supplier as a result of the tooling delays. Grip costs have returned to historical levels as the appropriate tooling has been completed and production is now at more efficient levels. Operating expenses for the second quarter of 1998 were $550,036 compared to $499,170 for the second quarter of 1997. Selling expenses for the second quarter of 1998 were $145,742, down from 10 $164,885, or 12% from th e second quarter of 1997. Depreciation expense increased to $109,225 or 5% over the second quarter of 1997 as more tooling was purchased for new sales orders. The company redirected its sales and marketing efforts to the replacement market. The Company has focused more on its marketing partnerships with catalog resellers such as Golfsmith, the world's largest reseller of golf club components. During the third quarter of 1997, the Company also initiated a new distributor program to increase replacement market sales to retailers and other non-OEM customers. Management believes that these programs will enable the Company to ultimately increase sales to the replacement market while incurring less expense and risk related to servicing the replacement market directly. Significant benefits from these programs are not expected until 1998. Liquidity and Capital Resources - ------------------------------- The Company had a significant working capital deficit of $2,399,882 at January 31, 1998. The working capital deficit at July 31, 1997 was $1,781,444. In addition, the stockholders' deficit at January 31, 1998 was $1,711,853 compared to $999,124 at July 31, 1997. The $618,438 increase in working capital deficit is directly attributable to the cash used in operating activities and investments in property and equipment (tooling). Since the beginning of 1995, the Company has borrowed, from various sources, approximately $3,360,000 in short-term borrowings, notes payable and long-term obligations, of which approximately $716,000, including $535,000 of notes payable to the President, has been converted into Common Stock. Also included in the $3,360,000 is $610,000 loaned to the Company by the President since August 1, 1997 for operating funds. During this same period, the Company received approximately $3,700,000 in proceeds from the issuance of Common Stock through private placements. Included in current liabilities at January 31, 1998 is approximately $1,322,000 of long-term obligations due in 1998, which are personally guaranteed and/or collateralized by the personal assets of the President. Also, at January 31, 1998, $1,206,996 and $243,048 of the Company's current liabilities were notes payable and accrued liabilities, respectively, to the President and another officer, who is also a stockholder. Of the $1,321,997 current portion of long- term obligations, $1,180,000 is owed to a bank and matures on June 15, 1998. Historically, the Company has been able to extend this obligation; however, to date, the Company has not obtained any written commitment from the bank to extend these loans past June 15, 1998, and no assurance can be given that the obligations will be extended past June 15, 1998, or that the Company will be able to obtain new loan commitments from another lender to repay the $1,180,000. The notes payable to the stockholders permit the stockholders to demand repayment at any time. Historically, the stockholders have obliged the Company in deferring any amounts owed to them. However, the Company cannot ensure the stockholders will continue to accept deferral of any amounts owed to them. Additionally, the notes payable to stockholders bear interest at 10%. Previously, the amounts owed to the stockholders, which were included in amounts due stockholder and accrued liabilities, did not bear interest. The Company is not expected to generate sufficient cash from operations necessary to repay these obligations unless they are extended or otherwise deferred until such time as cash from operations, if ever, is sufficient to repay these obligations. It will be necessary to either extend the maturities, sell additional shares of the Company's equity securities or obtain alternative financing to repay them. As a result of cash flow constraints, compounded by the increased operating cash flow deficit, the Company had to prioritize its payments to vendors, debt holders and others. Management has identified payroll, rent, utilities and certain office expenses, suppliers, tooling and certain debt holders as the most critical obligations. While Management tries to maximize credit opportunities through trade payables, its major vendors (i.e. the grip manufacturers) have stringent payment requirements. Since June of 1997, the Company has agreed to formalized payment arrangements with certain vendors for amounts owed to them in the normal course of business, totaling 11 approximately $100,000. Historically, the Company's first two quarters have resulted in lower net sales compared to the last two quarters of each fiscal year, corresponding with the golf industry's selling season. This seasonality places additional strains on liquidity, as the Company is required to invest in tooling and build inventories during its first two quarters in order to meet spring delivery schedules. The Company must also support the corresponding increase in receivables during the initial portion of the prime selling season. Management anticipates the Company will require additional funding of approximately $350,000 through August 1, 1998 in addition to the $610,000 loaned to the Company since July 31, 1997 by the President to fund operating losses and projected tooling requirements. In addition, if existing debt obligations can not be extended or otherwise deferred, additional fundings of approximately $1,200,000 will be necessary by July 31, 1998. Furthermore, Management estimates that the Company would require an additional $500,000 through 1998 and beyond to make the appropriate investments in machinery, marketing and advertising, research and development it deems necessary to effectively compete with the Company's key competitors. In November 1997, the Company retained the services of an investment banking firm to advise and assist the Company regarding financing alternatives and potential mergers and acquisitions. As a result, the Company is currently pursuing a private placement through the investment banking firm. The Company will continue to identify and pursue other opportunities to meet these requirements. The Company is also seeking to obtain concessions and/or deferred payment plans from vendors on amounts owed. Additional bank financing is not expected to be an option unless credit enhancements, such as guarantees, are available, or until such time the Company has at least one fiscal quarter of profitability. None of these sources or alternatives may be available to the Company and, if they become available, may not occur within the time frame required by the Company or may require terms which Management finds unacceptable. The continued losses, the existing debt obligations due in 1998 and the need for additional capital raises substantial doubt about the Company's ability to continue operating as a going concern. 12 PART II Item 1. Legal Proceeding On December 18, 1997, Registrant and Sam G. Lindsay ("Lindsay") were served with a summons and complaint by Donald Poulin ("Poulin") and Don and Olivine Associates, Inc. (formerly Poulin Progrip, Inc.) ("PPG") in an action filed in the Los Angeles County Superior Court. The complaint seeks damages related to claims arising out of the original acquisition by Restraint of certain assets from PPG and obligations of Registrant to pay Poulin and PPG consulting fees and compensation for non-competition covenants. The amount alleged to be owed is $271,000. Poulin and PPG also claim that Registrant improperly disposed of certain equipment which collateralized Registrant's obligation to pay the consulting and covenant fees. In addition, Poulin seeks to perfect his rights to 100,000 shares of Registrant's stock which were pledged to him by Lindsay as part of the acquisition transaction to secure payment of the consulting and covenant amounts. As of February 11, 1998, Registrant, Lindsay, Poulin and PPG entered into a written Settlement Agreement pursuant to which the action has been settled, on a conditional basis, upon payment by Registrant of $25,000 to Poulin and an agreement by Registrant to pay Poulin an additonal $175,000 from the proceeds of a private placement. As part of the settlement, Poulin and PPG have dismissed the action, without prejudice, with the right to refile the action if Registrant has not paid off the additional $175,000 by September 30, 1998. Item 2. Changes in Securities In November 1997, the Company granted to certain directors, stock options to purchase a total of 220,000 shares of Common Stock. The exercise price of the options is $0.5625 per share, the fair market value of the shares on the date of the grant. The options are fully vest and expire in November 2002. In November 1997, the Company issued to the President a warrant to purchase 250,000 shares of Common Stock. The exercise price of the warrant is $0.5625 per share. The warrant is fully vested and has a term of five years. In November 1997, the Company issued to an investment banking firm a warrant to purchase up to 600,000 shares of Common Stock. The exercise price of the warrant is $1.50 per share. The warrant, a portion of which is performance based, has a term of five years and vests over two years. The warrant also includes certain anti-dilution provisions. Item 4. Submission of Matters to Vote of Security Holders On December 19, 1997, Registrant held its annual meeting of shareholders. At the meeting, Sam G. Lindsay, James E. McCormick III, David W. Hardee, Luther H. Hodges, Jr. and Geoffrey S.P. Madden were elected as directors of Registrant. The votes for each nominee were as follows: 13 For Against Abstain Sam G. Lindsay 4,150,954 0 46,011 James E. McCormick, III 4,150,954 0 46,011 David W. Hardee 4,150,731 0 46,234 Luther H. Hodges, Jr. 4,150,731 0 46,234 Geoffrey S.P. Madden 4,150,731 0 46,234 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits -------- 2.1 Agreement and Plan of Reorganization, dated September 20, 1995, by and among Registrant, USG Acquisition Corporation and USGRIPS, Inc., as amended - incorporated by reference from Exhibit 2.1 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 3.1(i) Restated Articles of Incorporation of Registrant - incorporated by reference from Exhibit 3.1(i) to Registrant's Form 10-K for its fiscal year ended July 31, 1996 3.1(ii) Amended and Restated Bylaws of Registrant - incorporated by reference from Exhibit 3.1(ii) to Registrant's Form 10-K for its fiscal year ended July 31, 1996 4.1 Promissory Note, dated December 10, 1993, made payable by Registrant to Kwang Soo Kim and In Ho Kim in the original principal sum of $50,000 - incorporated by reference from Exhibit 4.1 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 4.2 Loan documents for $780,000 loan from Wells Fargo Bank, including Loan Commitment Note, dated January 14, 1997; Addendum to Promissory, dated February 12, 1997; Third Party Security Agreement: Securities Account, dated January 14, 1997; Addendum to Third Party Security Agreement: Securities Account, dated February 12, 1997; and Securities Account Control Agreement, dated February 12, 1997; and Securities Account Control Agreement, dated February 14, 1997 - incorporated by reference from Exhibit 4.1 to Registrant's Form 10-Q for its fiscal quarter ended April 30, 1997 4.3 Loan extension letter, dated September 15, 1997, to Registrant from Wells Fargo Bank extending that certain $780,000 Promissory Note included in Item 4.2 above - incorporated by reference from Exhibit 4.3 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 4.4 Revolving Line of Credit Note, dated September 23, 1996, made payable by Registrant to Wells Fargo Bank N.A. in the original principal sum of $400,000 - incorporated by reference from Exhibit 4.4 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 14 4.5 Loan extension letter, dated September 15, 1997, to Registrant from Wells Fargo Bank extending that certain $400,000 Revolving Line of Credit Note included in Item 4.4 above - incorporated by reference from Exhibit 4.5 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 4.6 Secured Promissory Note, made payable by Registrant to Sam G. Lindsay in the following amounts on the following dates - incorporated by reference from Exhibit 4.6 to Registrant's Form 10-K for its fiscal year ended July 31, 1997: $ 100,000 July 31, 1997 or thereafter on demand $ 100,000 September 19, 1997, or thereafter on demand $ 50,000 October 16, 1997, or thereafter on demand $ 200,000 October 20, 1997, or thereafter on demand $ 50,000 November 7, 1997, or thereafter on demand $ 50,000 November 28, 1997, or thereafter on demand $ 50,000 December 15, 1997, or thereafter on demand $ 50,000 December 18, 1997, or thereafter on demand $ 10,000 December 19, 1997, or thereafter on demand $ 50,000 January 31, 1998, or thereafter on demand $ 90,000 February 20, 1998, or thereafter on demand 4.7 Promissory Note, dated July 31, 1997, made payable by Registrant to Sam G. Lindsay in the principal amount of $421,679 -incorporated by reference from Exhibit 4.7 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 4.8 Convertible Promissory Note, dated March 12, 1997, made payable by Registrant to the Caroline Companies LLC in the principal amount of $137,500 and accrued interest of $4,726 - incorporated by reference from Exhibit 4.8 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 4.9 Convertible Note issued by Registrant in May 1997 to the following lenders in the following amounts -incorporated by reference from Exhibit 4.9 to Registrant's Form 10-K for its fiscal year ended July 31, 1997: $ 21,000 Z-Fund, a Maryland limited partnership $ 500,000 Third Century II, a Colorado general partnership 4.10 Promissory Note, dated July 31, 1997, made payable by Registrant to James E. McCormick III in the principal amount of $195,281.02 - incorporated by reference from Exhibit 4.10 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 10.1 1994 Stock Option Plan - incorporated by reference from Exhibit 10.1 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 10.2 Amendment No. 1 to Stock Option Plan - incorporated by reference from Exhibit 10.8 to Registrant's Form 10-Q for its fiscal quarter ended January 31, 1997 10.3 Noncompetition Agreement, dated September 22, 1995, between Registrant and J. Barrie Ogilvie - incorporated by reference from Exhibit 10.3 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 15 10.4 Security Agreement, dated July 31, 1995, between Registrant and Sam G. Lindsay - incorporated by reference from Exhibit 10.4 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 10.5 Amendment No. 1 to Security Agreement, dated July 31, 1997, between Registrant and Sam G. Lindsay - incorporated by reference from Exhibit 10.5 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 10.6 Request to Convert and Investment Letter, dated July 31, 1996, between Registrant and Sam G. Lindsay - incorporated by reference from Exhibit 10.6 to Registrant's Form 10-K for the fiscal year ended July 31, 1996 10.7 Agreement, dated September 22, 1995, between Registrant and ARC Equipment, Inc. - incorporated by reference from Exhibit 10.7 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 10.8 Employment Agreement, dated September 26, 1997, between Registrant and Victor Afable - incorporated by reference from Exhibit 10.8 to Registrant's Form 10-K for its fiscal year ended July 31, 1997 10.9 Financial Advisor Agreement, dated November 14, 1997, and Indemnification Agreement, dated November 14, 1997, between Registrant and Christman, Peters & Madden - incorporated by reference from Exhibit 10.9 to Registrant's Form 10-Q for its quarter ended October 31, 1997 10.10 Warrant For the Purchase of Shares of Common Stock, dated November 14, 1997, issued by Registrant to Christman, Peters & Madden - incorporated by reference from Exhibit 10.10 to Registrant's Form 10-Q for its quarter ended October 31, 1997 10.11 Stock Purchase Warrant, dated November 12, 1997, issued by Registrant to Sam G. Lindsay 21.1 Subsidiaries of Registrant - incorporated by reference from Exhibit 21.1 to Registrant's Form 10-K for its fiscal year ended July 31, 1996 27 Financial data schedule (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed with the Securities and Exchange Commission during the Registrant's fiscal quarter ended January 31, 1998 16 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 thereunto duly authorized. Grip Technologies, Inc. ------------------------------ (Registrant) Date: March 16, 1998 /s/ Sam G. Lindsay ------------------------------ Sam G. Lindsay President, Chief Executive Officer, Chief Operations and Financial Officer, and Chief Accounting Officer 17