U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended February 28, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.
For the transition period from __________ to _________.
Commission File Number: 0-22889
ROYAL PRECISION, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 06-1453896
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15170 North Hayden Road, Suite 1, Scottsdale, AZ 85260
(Address of Principal Executive Offices) (Zip code)
(602) 627-0200
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former
Fiscal Year if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
Title of each class Outstanding at April 12, 1999
------------------- -----------------------------
Common Stock, par value $.001 5,667,375 Shares
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
<PAGE>
ITEM 1.
ROYAL PRECISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
FEBRUARY 28, MAY 31,
1999 1998
-------- --------
ASSETS (UNAUDITED)
CURRENT ASSETS:
Cash $ 21 $ 28
Accounts receivable, net of allowance for
doubtful accounts of $473 at February 28, 1999
and $602 at May 31, 1998 3,077 4,042
Inventories 5,226 4,049
Current portion of net investment in capital lease 254 240
Other current assets 368 74
Deferred income taxes 265 265
-------- --------
Total current assets 9,211 8,698
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 123 123
Buildings and improvements 670 689
Furniture, fixtures and office equipment 455 544
Machinery and equipment 3,513 3,894
-------- --------
4,761 5,250
Less - Accumulated depreciation (823) (754)
-------- --------
3,938 4,496
-------- --------
GOODWILL, net 9,637 10,028
-------- --------
NET INVESTMENT IN CAPITAL LEASE,
less current portion 2,381 2,593
-------- --------
OTHER ASSETS 56 71
-------- --------
Total assets $ 25,223 $ 25,886
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines-of-credit $ 3,977 $ 3,462
Current portion of long-term debt and capital
lease obligations 1,519 1,047
Accounts payable 1,853 1,769
Accrued salaries and benefits 667 760
Other accrued expenses 1,648 1,259
-------- --------
Total current liabilities 9,664 8,297
-------- --------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
less current portion 3,594 3,171
-------- --------
DEFERRED INCOME TAXES 46 46
-------- --------
OTHER LIABILITIES 1 45
-------- --------
Total liabilities 13,305 11,559
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value; 5,000,000
shares authorized; no shares issued -- --
Common stock, $.001 par value; 50,000,000
shares authorized; 5,667,375 and 5,601,697
shares issued and outstanding at February 28, 1999
and May 31, 1998, respectively 6 6
Additional paid-in capital 13,853 13,821
Retained earnings (deficit) (1,941) 500
-------- --------
Total stockholders' equity 11,918 14,327
-------- --------
Total liabilities and stockholders' equity $ 25,223 $ 25,886
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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<PAGE>
ROYAL PRECISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- -------------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES:
Golf shafts $ 4,178 $ 5,326 $ 12,220 $ 14,790
Golf grips 940 1,093 2,787 2,391
---------- ---------- ---------- ----------
5,118 6,419 15,007 17,181
---------- ---------- ---------- ----------
COST OF SALES:
Golf shafts 3,075 3,954 8,295 10,853
Golf grips 589 686 1,566 1,029
---------- ---------- ---------- ----------
3,664 4,640 9,861 11,882
---------- ---------- ---------- ----------
Gross profit 1,454 1,779 5,146 5,299
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,615 1,930 4,997 4,700
MERGER RELATED EXPENSES 503 90 503 765
---------- ---------- ---------- ----------
Operating loss (664) (241) (354) (166)
INTEREST EXPENSE 206 163 595 430
OTHER INCOME (74) (56) (199) (113)
---------- ---------- ---------- ----------
Loss from continuing operations
before income tax expense (benefit) (796) (348) (750) (483)
INCOME TAX EXPENSE (BENEFIT) 16 (184) (39) (361)
---------- ---------- ---------- ----------
Loss from continuing operations (812) (164) (711) (122)
DISCONTINUED OPERATIONS:
Loss from operations of Roxxi, Inc. (127) (113) (516) (420)
Provision for loss on disposal of
assets of Roxxi, Inc. (1,214) -- (1,214) --
---------- ---------- ---------- ----------
Net loss $ (2,153) $ (277) $ (2,441) $ (542)
========== ========== ========== ==========
BASIC AND DILUTED LOSS FROM CONTINUING
OPERATIONS PER COMMON SHARE $ (0.14) $ (0.03) $ (0.13) $ (0.03)
BASIC AND DILUTED LOSS FROM OPERATIONS
OF ROXXI, INC. PER COMMON SHARE (0.02) (0.02) (0.08) (0.08)
BASIC AND DILUTED LOSS FROM PROVISION FOR LOSS
ON DISPOSAL OF ROXXI, INC. PER COMMON SHARE (0.22) -- (0.22) --
---------- ---------- ---------- ----------
BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.38) $ (0.05) $ (0.43) $ (0.11)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING USED IN COMPUTING PER SHARE
INFORMATION 5,667,375 5,596,914 5,643,818 5,127,624
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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<PAGE>
ROYAL PRECISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
NINE MONTHS ENDED
--------------------------
FEBRUARY 28, FEBRUARY 28,
1999 1998
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $ (711) $ (122)
Adjustments to reconcile net loss from
continuing operations to net cash (used in)
provided by operating activities--
Cash loss from operations of Roxxi, Inc. (299) (257)
Depreciation and amortization 703 574
Loss on write-off of fixed assets, net -- 347
Changes in operating assets and liabilities,
net of effect of business acquired--
Accounts receivable 965 633
Inventories (1,682) 427
Other assets (47) 166
Accounts payable and accrued expenses 399 (880)
Supply agreement credits -- (472)
Other liabilities (44) --
-------- --------
Net cash (used in) provided by operating
activities (716) 416
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired from Royal Grip, Inc. -- 18
Payments from net investment in capital lease 198 --
Purchases of equipment, net (754) (776)
Merger costs (162) (1,032)
-------- --------
Net cash used in investing activities (718) (1,790)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock
warrants and options 17 14
Proceeds from issuance of long-term debt 5,140 1,000
Borrowings under lines-of-credit, net 515 1,075
Repayments of long-term debt and capital
lease obligations (4,245) (743)
-------- --------
Net cash provided by financing activities 1,427 1,346
-------- --------
DECREASE IN CASH (7) (28)
CASH, beginning of period 28 28
-------- --------
CASH, end of period $ 21 $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for --
Interest $ 649 $ 473
======== ========
Income taxes $ 82 $ 60
======== ========
Non-cash transactions --
Provision for loss on disposal of
assets of Roxxi, Inc. $ 1,214 $ --
======== ========
Issuance of common stock and options and
warrants to purchase common stock for
acquisition of Royal Grip, Inc. $ -- $ 12,995
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-4-
<PAGE>
ROYAL PRECISION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION --
The condensed consolidated financial statements of Royal Precision, Inc.
and subsidiaries (collectively, "RPI" or the "Company") presented
herein have been prepared pursuant to the rules of the Securities and
Exchange Commission for quarterly reports on Form 10-QSB and do not
include all of the information and note disclosures required by generally
accepted accounting principles. These condensed consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements and notes thereto for the year ended May 31, 1998
included in the Company's Form 10-KSB. In the opinion of management, the
accompanying unaudited condensed consolidated financial statements
include all adjustments, consisting of only normal recurring adjustments,
necessary to present fairly the consolidated financial position, results
of operations and cash flows of the Company. Quarterly operating results
are not necessarily indicative of the results that would be expected for
the full year.
PRINCIPLES OF CONSOLIDATION --
The accompanying condensed consolidated financial statements include
Royal Precision, Inc. and its three wholly-owned subsidiaries, FM
Precision Golf Manufacturing Corp. ("FMP"), FM Precision Golf Sales Corp.
("FM Sales") and Royal Grip, Inc. (formerly FMPSUB, Inc.) and its wholly
owned subsidiary, Roxxi, Inc. (collectively "RG"). On May 14, 1997, RPI
entered into an Agreement and Plan of Merger with RG. Under the terms of
the Merger agreement, effective August 29, 1997, FMPSUB, Inc. (a wholly
owned subsidiary of RPI created for such purpose) merged with and into RG
(the "FMP-RG Merger"). RG was the surviving corporation and became a
wholly owned subsidiary of RPI. Accordingly, the results of operations of
RPI for all periods presented exclude the results of operations of RG
prior to August 29, 1997. All significant intercompany balances and
transactions have been eliminated in consolidation. As discussed in Notes
7 and 8, the Company has entered into an agreement to merge with Coyote
Sports, Inc. and has disposed of the operating assets of Roxxi, Inc.
("Roxxi").
REPORTING PERIODS --
The Company's first three fiscal quarters in the fiscal year ended May
31, 1998 ended on a Saturday. The Company's first three fiscal quarters
in the fiscal year ending May 31, 1999 end on the last calendar day of
the quarter. The Company's year-end is May 31.
2. NET LOSS PER SHARE:
Basic earnings per common share are based on the average number of common
shares outstanding during the periods presented. Common share equivalents
of approximately 150,000 shares during the three and nine month periods
ended February 28, 1999 and approximately 170,000 shares during the three
and nine month periods ended February 28, 1998 were antidilutive in all
periods presented and are excluded from diluted earnings per share.
3. NEW ACCOUNTING STANDARD:
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The Company will be required to adopt SFAS No. 133 as of June 1,
2000 and does not anticipate any material impact resulting from the
adoption of this pronouncement.
-5-
<PAGE>
4. INVENTORIES:
Inventories as of February 28, 1999 and May 31, 1998 consisted of the
following (in thousands):
FEBRUARY 28, 1999 MAY 31, 1998
----------------- ------------
Raw materials $ 525 $1,161
Work-in-process 1,979 1,206
Finished goods 2,722 1,682
------ ------
$5,226 $4,049
====== ======
5. INFORMATION ON SEGMENTS:
The Company has two reportable segments within continuing operations:
golf club shafts and golf club grips. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies in Form 10-KSB. The Company evaluates the performance
of these segments based on segment profit or loss after income taxes. The
Company allocates certain administrative expenses to segments. The
amounts in this illustration are the amounts in reports used by the chief
operating officer as of February 28, 1999 (in thousands):
THREE MONTHS ENDED FEBRUARY 28, 1999
------------------------------------
GOLF GOLF
SHAFTS GRIPS TOTAL
------ ----- -----
Revenues from external customers $ 4,178 $ 940 $ 5,118
Segment profit (loss) (709) (103) (812)
Segment assets 10,752 11,417 22,169
Total assets for reportable segments $ 22,169
Assets of discontinued operation 630
Elimination of investment in
subsidiaries (7,213)
Goodwill not allocated to segments 9,637
--------
Consolidated total assets $ 25,223
========
THREE MONTHS ENDED FEBRUARY 28, 1998
------------------------------------
GOLF GOLF
SHAFTS GRIPS TOTAL
------ ----- -----
Revenues from external customers $ 5,326 $ 1,093 $ 6,419
Segment profit (loss) (167) 3 (164)
Segment assets 9,179 11,821 21,000
Total assets for reportable segments $ 21,000
Assets of discontinued operation 2,147
Elimination of investment in
subsidiaries (7,768)
Goodwill not allocated to segments 10,158
--------
Consolidated total assets $ 25,537
========
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<PAGE>
NINE MONTHS ENDED FEBRUARY 28, 1999
-----------------------------------
GOLF GOLF
SHAFTS GRIPS TOTAL
------ ----- -----
Revenues from external customers $ 12,220 $ 2,787 $ 15,007
Segment profit (loss) (730) 19 (711)
Segment assets 10,752 11,417 22,169
Total assets for reportable segments $ 22,169
Assets of discontinued operation 630
Elimination of investment in
subsidiaries (7,213)
Goodwill not allocated to segments 9,637
--------
Consolidated total assets $ 25,223
========
NINE MONTHS ENDED FEBRUARY 28, 1998
-----------------------------------
GOLF GOLF
SHAFTS GRIPS TOTAL
------ ----- -----
Revenues from external customers $ 14,790 $ 2,391 $ 17,181
Segment profit (loss) (481) 359 (122)
Segment assets 9,179 11,821 21,000
Total assets for reportable segments $ 21,000
Assets of discontinued operation 2,147
Elimination of investment in
subsidiaries (7,768)
Goodwill not allocated to segments 10,158
--------
Consolidated total assets $ 25,537
========
6. BORROWING ARRANGEMENTS:
On October 9, 1998, FMP entered into a new credit facility and RG amended
its existing borrowing arrangement. In connection with the new credit
facility for FMP, all loans to FMP were paid off and a new credit and
security agreement was entered into with RG's lender. In connection with
the repayment of the amounts outstanding under the old FMP credit
facility, FMP paid a $75,000 prepayment penalty which is reflected as a
component of interest expense in the second quarter of fiscal 1999. Terms
of FMP's new credit facility are as follows. The amount available for
borrowings under the FMP term loan is $4.3 million. Such amount was
funded on October 9, 1998. FMP's term loan is due in monthly principal
installments of $99,000 through and until October 1, 1999 and $65,000
monthly, thereafter until the maturity of the loan. The amount available
for borrowings under the FMP revolving line-of-credit is based upon the
levels of eligible accounts receivable and inventories, as defined,
subject to maximum borrowing of $4.0 million.
The borrowing arrangement with RG was amended and restated. The amendment
resulted in the funding of a new RG term loan of $840,000 on October 9,
1998 in addition to the existing RG term loan that had $472,000
outstanding at October 9, 1998. RG's term loans are due in monthly
principal installments of $40,000 through and until October 1, 1999 and
$22,500 monthly, thereafter until the maturity of the loan. The amount
available for borrowings under the RG revolving line-of-credit is based
upon the levels of eligible accounts receivable and inventories, as
defined, subject to maximum borrowing of $1.5 million.
Effective January 1, 1999, borrowings under all term loans and both
revolving lines-of-credit bear interest at a rate per annum equal to the
prime rate (7.75% at February 28, 1999) plus 2.75% and 2.25%,
respectively, and are secured by substantially all of the Company's
assets. The maturity date for all term loans and both revolving
lines-of-credit is September 30, 2001. On February 28, 1999, the Company
had $3,977,000 outstanding under the revolving lines-of-credit and
$949,000 available for additional borrowings.
Primarily as a result of merger-related expenses of $503,000 and a
provision of approximately $1.2 million for the loss on the sale of
Roxxi, the Company defaulted on certain bank covenants during the quarter
-7-
<PAGE>
ended February 28, 1999. The violation of these covenants has been waived
by the lender. In connection with granting the waivers, the Company's
lender increased the Company's borrowing rate by 2% per annum effective
January 1, 1999.
The Company's lender modified its covenants for the remainder of the
fiscal year ending May 31, 1999. The required debt service coverage ratio
has been waived through May 31, 1999 and the maximum monthly allowable
net loss has been reduced from breakeven to an aggregate net loss of
$150,000 for the months of March, April and May of 1999. In addition, the
minimum annual net income requirement for the fiscal year ending May 31,
1999 has been reduced from net income of $400,000 to a net loss of
$500,000. The modified covenants exclude all merger-related expenses and
the provision for the loss associated with the disposition of Roxxi.
7. DISCONTINUED OPERATION:
During March 1999, the Company disposed of the operating assets of Roxxi
through two transactions with unrelated parties. In one transaction,
Roxxi sold its trade name, customer list, design database and related
computer software and hardware. In return, the Company will receive a
royalty of 16% of the buyer's net sales for the two-year period beginning
May 1, 1999. In the second transaction, Roxxi sold its headwear
manufacturing equipment, headwear inventory and raw materials. Roxxi
received $300,000 at closing and the Company will receive a royalty of 2%
of the buyer's net sales until the buyer has paid an additional $200,000.
In the fiscal quarter ended February 28, 1999, the Company recorded a
loss provision of approximately $1.2 million on the disposition of the
Roxxi assets. This amount reflects a $1,059,000 write-down of the excess
book value of inventory and fixed assets over the cash received in the
sale, the establishment of a reserve totaling $80,000 for estimated costs
associated with the transaction, and $75,000 for estimated operating
losses to be incurred during the phase-out period of this business
segment. The Company will account for royalty fees as income in future
periods as payments are received from the two buyers.
During the three months ended February 28, 1999 and 1998, Roxxi recorded
net sales of $0.5 million and $0.8 million, respectively. During the nine
months ended February 28, 1999 and 1998, Roxxi recorded net sales of $1.9
million and $1.8 million, respectively. The net operating results of
Roxxi are segregated from income from continuing operations in the
condensed consolidated statements of operations and are reflected as
discontinued operations for all periods presented. Included in the Roxxi
operating losses of $127,000 and $113,000 for the three month periods
ended February 28, 1999 and 1998 are depreciation expense of $72,000 and
$80,000, respectively. Included in the Roxxi operating losses of $0.5
million and $0.4 million for the nine month periods ended February 28,
1999 and 1998 are depreciation expense of $217,000 and $163,000,
respectively. As of February 28, 1999, the remaining assets and
liabilities of Roxxi include net accounts receivable of $300,000, assets
held for sale at a value of $300,000 (included in other current assets)
and accounts payable and accrued expenses totaling $290,000.
8. MERGER:
On February 2, 1999, the Company and Coyote Sports, Inc. ("Coyote")
entered into a merger agreement. Pursuant to the terms of the merger
agreement, Coyote will be the surviving publicly-traded company and RPI
will become a wholly owned subsidiary of Coyote (the "RPI-Coyote
Merger"). Coyote, along with its subsidiaries, designs, engineers,
manufactures, markets and distributes brand name sports equipment and
recreational products including steel and graphite golf shafts, premium
grade cycle tubing and javelins and also produces graphite and other
advanced composite materials for use in the production of sporting goods
products. The RPI-Coyote Merger must be approved by both the Company's
stockholders and Coyote's stockholders and is contingent upon conditions
which must be fulfilled prior to consummation of the transaction. These
conditions include the filing of a registration statement, obtaining
adequate financing and various other obligations identified in the merger
agreement. Management believes the RPI-Coyote Merger will be consummated
in the second calendar quarter of 1999. However, there can be no
assurance that the RPI-Coyote Merger will be consummated. During the
third fiscal quarter ended February 28, 1999, the Company incurred costs
totaling $503,000 related to the RPI-Coyote Merger which have been
reflected as Merger Related Expenses in the accompanying financial
statements.
-8-
<PAGE>
9. TERMINATION OF ACUSHNET SUPPLY AGREEMENT:
During March 1999, RG received a letter from Acushnet Rubber Company
("Acushnet") terminating the Manufacturing and Supply Agreement and
Capital Lease Agreement. In the notice of termination, Acushnet agreed to
pay RG a $2.5 million termination fee at the end of the transition
period, to continue to produce grips for ten months and to pay up to
$100,000 for shipping and installing the manufacturing equipment at a new
location. In connection with the termination, RG will receive the
manufacturing equipment and Acushnet's obligation under the capital lease
will be terminated. At February 28, 1999, the Company's capital equipment
lease receivable was approximately $2.6 million. Also in the termination
letter, Acushnet stated that it would not continue paying the lease
payments. The Company has not responded to Acushnet's termination letter;
however, the Company and legal counsel believe that Acushnet's
interpretation of the clause in the contract related to the lease
payments is without merit and the Company will pursue its rights under
the contract to receive lease payments throughout the transition period.
RG currently has no back-up source of supply; however, the Company is
currently in discussions with a number of grip manufacturers which the
Company believes can maintain RG's standard of product quality and will
facilitate a smooth transition. There can be no assurances that the
Company will be able to secure a source for grips on as favorable terms
or with the same or better quality as Acushnet. In addition, there can be
no assurances that a transition to a new supplier will not result in
production delays, the loss of sales and key customers which would
materially affect RG's financial condition and results of operations.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS --
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. The Company believes it has made forward-looking
statements within the meaning of the Litigation Reform Act in this Form 10-QSB,
other Forms 10-QSB, Forms 10-KSB, Forms 8-K, and other written or oral
statements made by or on behalf of RPI which reflect RPI's current views with
respect to future events and financial performance. These forward-looking
statements are subject to certain uncertainties and other factors that could
cause actual results to differ materially from such statements. These
uncertainties and other factors include, but are not limited to, uncertainties
relating to international, national, and local economic conditions, customer
plans and commitments, RPI's cost of raw materials, the competitive environment
in which RPI operates, and changes in the financial markets relating to RPI's
capital structure and cost of capital. Statements in this Form 10-QSB, including
the Notes to the Condensed Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations,
describe factors among others, that could contribute to or cause such
differences. Additional factors that could cause actual results to differ
materially from those expressed in such forward looking statements are detailed
in RPI's Form 10-KSB. Please refer to "Risk Factors" therein. The words
"believe," "expect," "anticipate," "project," and similar expressions identify
forward looking statements, which speak only as of the date the statement was
made.
OVERVIEW --
Royal Precision, Inc. ("RPI" or the "Company") is a holding company with three
wholly-owned subsidiaries which are FM Precision Golf Manufacturing Corp.
("FMP"), FM Precision Golf Sales Corp. ("FM Sales"), Royal Grip, Inc. (formerly
known as FMPSUB, Inc.) and its wholly owned subsidiary, Roxxi, Inc.
(collectively "RG"). RPI acquired RG on August 29, 1997 by means of a merger
whereby FMPSUB, Inc. merged with and into RG with RG being the surviving
corporation. The effective date of the FMP-RG Merger was August 29, 1997.
Accordingly, the results of operations of RPI for all periods presented exclude
the results of operations of RG prior to August 29, 1997. As discussed in Notes
7 and 8 to the condensed consolidated financial statements, the Company has
entered into an agreement to merge with Coyote Sports, Inc. and has disposed of
the operating assets of Roxxi, Inc. ("Roxxi").
FMP is a manufacturer and distributor of golf club shafts that are sold to
original equipment manufacturers ("OEMs") and to distributors and retailers for
use in the replacement market. The majority of FMP's sales are to OEMs. FMP also
sells golf shafts in foreign markets including Japan, Canada, Australia and the
United Kingdom. RG designs and distributes golf club grips. RG's products are
sold primarily throughout the United States, Japan and the United Kingdom. The
majority of RG's grip sales are to its Japanese distributor. In December 1996,
RG outsourced the manufacturing of its non-cord grips to Acushnet Rubber
Company.
The Company's business experiences the impact of seasonality with stronger
demand for products during the quarters ending in February and May.
THREE MONTHS ENDED FEBRUARY 28, 1999 COMPARED TO THE THREE MONTHS ENDED
FEBRUARY 28, 1998 -
NET SALES. Net sales for the three months ended February 28, 1999 were $5.1
million, a decrease of 20% from net sales of $6.4 million for the corresponding
period in 1998. The decrease in net sales of $1.3 million is primarily
attributable to a reduction in sales of the Company's lower priced commercial
grade golf club shafts of $1.9 million or 87%. Sales of this product were
significantly reduced following a price increase instituted by the Company in
the first quarter of fiscal 1999. In response to these unfavorable results, the
Company has modified its pricing structure in an effort to increase sales of
this product in future periods. Net sales of the Company's other golf club shaft
lines increased by $0.8 million or 25%. Net sales of golf club grips decreased
by $0.2 million or 14% primarily as a result of decreased business with two
significant OEM customers which accounted for $112,000 in sales during the three
months ended February 28, 1998 compared to $15,000 during the comparable period
in 1999.
COST OF GOODS SOLD. Cost of goods sold for the three months ended February 28,
1999 was $3.7 million, a decrease of 21% from cost of goods sold of $4.6 million
for the same period in 1998. The decrease in cost of goods sold of $1.0 million
is primarily attributable to the decline in sales of commercial grade golf club
shafts discussed above. Total golf club shaft cost of goods sold decreased by
$0.9 million. Golf club grips cost of sales decreased by $0.1 million as a
result of lower sales.
-10-
<PAGE>
GROSS PROFIT. Gross profit for the three months ended February 28, 1999 was $1.5
million, a decrease of $0.3 million or 18% from gross profit of $1.8 million for
the corresponding period in 1998. This represents a decline in gross profit on
sales of golf club shafts which decreased by $0.3 million or 20% for the three
months ended February 28, 1999 as compared to the same period last year due to
lower sales. As a percentage of sales, the gross profit on shaft sales increased
from 25.8% to 26.4% due to a change in the mix of products sold from lower
margin commercial grade shafts to higher margin Rifle shafts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended February 28, 1999 were $1.6
million, a decrease of 16% from selling, general and administrative expenses of
$1.9 million for the same period in 1998. The decrease in selling, general and
administrative expenses of $0.3 million is primarily attributable to a reduction
in marketing and advertising costs of $0.2 million.
MERGER RELATED EXPENSES. In conjunction with the pending RPI-Coyote Merger, the
Company incurred expenses totaling $0.5 million during the three months ended
February 28, 1999. In conjunction with the August 29, 1997 FMP-RG Merger,
expenses of $0.1 million were incurred during the three months ended February
28, 1998.
INTEREST EXPENSE. Interest expense for the three months ended February 28, 1999
was $206,000 compared to $163,000 for the same period last year. The increase in
interest expense is primarily attributable to the higher effective interest
rates in effect during the three months ended February 28, 1999 resulting from
defaults on certain bank covenants as discussed in Note 6 to the condensed
consolidated financial statements.
OTHER INCOME. Other income for the three-month periods ended February 28, 1999
and 1998 is consistent at $74,000 and $56,000, respectively.
INCOME TAXES. Income tax expense of $16,000 and a benefit from income taxes of
$184,000 were recorded for the three-month periods ended February 28, 1999 and
1998, respectively. Taxes are provided based on the estimated effective tax rate
for the year which considers the effect of nondeductible goodwill amortization
and the inability to carry-back RG losses to periods prior to the FMP-RG Merger.
LOSS FROM OPERATIONS OF ROXXI, INC. The losses from the operations of Roxxi for
the three-month periods ended February 28, 1999 and 1998 are consistent at
$127,000 and $113,000, respectively. No income tax benefit was provided for
these losses due to NOL carry-back limitations.
PROVISION FOR LOSS ON DISPOSAL OF ASSETS OF ROXXI, INC. As discussed in Note 7
to the condensed consolidated financial statements, a loss of approximately $1.2
million was recorded during the three-month period ended February 28, 1999 to
provide for the loss on disposition of the assets of Roxxi. No income tax
benefit was provided for this loss due to NOL carry-back limitations.
NINE MONTHS ENDED FEBRUARY 28, 1999 COMPARED TO THE NINE MONTHS ENDED
FEBRUARY 28, 1998 -
NET SALES. Net sales for the nine months ended February 28, 1999 were $15.0
million, a decrease of 13% from net sales of $17.2 million for the corresponding
period in 1998. The decrease in net sales of $2.2 million is primarily
attributable to a reduction in sales of the Company's lower priced commercial
grade golf club shafts of $4.4 million or 68%. Sales of this product were
significantly reduced following a price increase instituted by the Company in
the first quarter of fiscal 1999. In response to these unfavorable results, the
Company has modified its pricing structure in an effort to increase sales of
this product in future periods. Net sales of the Company's other golf club shaft
lines increased by $1.8 million or 21%. Net sales of golf club grips increased
by $0.4 million or 17% primarily due to the inclusion of RG golf club grip sales
of $1.0 million during the three month period ended August 31, 1998 compared to
$0 during the comparable period of 1997 which was prior to the effective date of
the FMP-RG Merger.
COST OF GOODS SOLD. Cost of goods sold for the nine months ended February 28,
1999 was $9.9 million, a decrease of 17% from cost of goods sold of $11.9
million for the same period in 1998. The decrease in cost of goods sold of $2.0
million is primarily attributable to the decline in sales of commercial grade
golf club shafts discussed above. Total golf club shaft cost of goods sold
decreased by $2.6 million. Golf club grips cost of goods sold increased by $0.5
-11-
<PAGE>
million primarily due to the inclusion of RG golf club grip cost of goods sold
of $0.5 million during the three month period ended August 31, 1998 compared to
$0 during the comparable period of 1997 which was prior to the effective date of
the FMP-RG Merger.
GROSS PROFIT. Gross profit for the nine months ended February 28, 1999 was $5.1
million, a decrease of 3% from gross profit of $5.3 million for the
corresponding period in 1998. The decrease in gross profit of $0.2 million is
primarily attributable to a $0.5 million credit received from Acushnet as
compensation for delays and shortfalls in the production of golf club grips for
the Company which was recorded as a one-time reduction in golf club grips cost
of sales during the second quarter of fiscal 1998. As a percentage of sales, the
gross profit on shaft sales has increased from 26.6% to 32.1% due to a change in
the mix of products sold from lower margin commercial grade shafts to higher
margin Rifle shafts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the nine months ended February 28, 1999 were $5.0
million, an increase of 6% from selling, general and administrative expenses of
$4.7 million for the same period in 1998. The increase in selling, general and
administrative expenses of $0.3 million is primarily attributable to the
inclusion of $0.5 million of selling, general and administrative expenses from
RG for the three month period ended August 31, 1998 compared to $0 during the
comparable period of 1997 which was prior to the effective date of the FMP-RG
Merger.
MERGER RELATED EXPENSES. In conjunction with the pending RPI-Coyote Merger, the
Company incurred expenses totaling $0.5 million during the nine months ended
February 28, 1999. In conjunction with the August 29, 1997 FMP-RG Merger,
expenses of $0.8 million were incurred during the nine months ended February 28,
1998.
INTEREST EXPENSE. Interest expense for the nine months ended February 28, 1999
was $595,000 compared to $430,000 for the same period last year. The increase in
interest expense is primarily attributable to a $75,000 loan prepayment fee
incurred on October 9, 1998 upon funding of the new credit facilities discussed
in Note 6 to the condensed consolidated financial statements. Additionally, RG
interest expense totaled $36,000 for three month period ended August 31, 1998
compared to $0 during the comparable period of 1997 which was prior to the
effective date of the FMP-RG Merger.
OTHER INCOME. Other income for the nine months ended February 28, 1999 was
$199,000, compared to $113,000 for the same period last year. This increase is
due to the inclusion of interest income of $54,000 from RG's capital lease
receivable for three month period ended August 31, 1998 compared to $0 during
the comparable period of 1997 which was prior to the effective date of the
FMP-RG Merger.
INCOME TAXES. A benefit from income taxes of $39,000 and $361,000 was recorded
for the nine-month periods ended February 28, 1999 and 1998, respectively. Taxes
are provided based on the estimated effective tax rate for the year which
considers the effect of nondeductible goodwill amortization and the inability to
carry-back RG losses to periods prior to the FMP-RG Merger.
LOSS FROM OPERATIONS OF ROXXI, INC. The losses from the operations of Roxxi for
the nine-month periods ended February 28, 1999 and 1998 are $516,000 and
$420,000, respectively. The increase is primarily due to the inclusion of Roxxi
operating losses of $190,000 for three month period ended August 31, 1998
compared to $0 during the comparable period of 1997 which was prior to the
effective date of the FMP-RG Merger. No income tax benefit was provided for
these losses due to NOL carry-back limitations.
PROVISION FOR LOSS ON DISPOSAL OF ASSETS OF ROXXI, INC. As discussed in Note 7
to the condensed consolidated financial statements, a loss of approximately $1.2
million was recorded during the nine-month period ended February 28, 1999 to
provide for the loss on disposition of the assets of Roxxi. No income tax
benefit was provided for this loss due to NOL carry-back limitations.
LIQUIDITY AND CAPITAL RESOURCES. At February 28, 1999, RPI had negative working
capital of $453,000 and a current ratio of 0.95 to 1 as compared to working
capital of $401,000 and a current ratio of 1.05 to 1 at May 31, 1998. On October
9, 1998, FMP entered into a new credit facility and RG amended its existing
borrowing arrangement. As a result, all of the Company's bank facilities are
consolidated with one lender. The Company believes that its existing capital
resources and credit lines available are sufficient to fund its operations and
capital requirements as presently planned over the next twelve months.
-12-
<PAGE>
In connection with the new credit facility for FMP, all loans to FMP were paid
off and a new credit and security agreement was entered into with RG's lender.
In connection with the repayment of the amounts outstanding under the old FMP
credit facility, FMP paid a $75,000 prepayment penalty which is reflected as a
component of interest expense in the second quarter of fiscal 1999. Terms of
FMP's new credit facility are as follows. The amount available for borrowings
under the FMP term loan is $4.3 million. Such amount was funded on October 9,
1998. FMP's term loan is due in monthly principal installments of $99,000
through and until October 1, 1999 and $65,000 monthly, thereafter until the
maturity of the loan. The amount available for borrowings under the FMP
revolving line-of-credit is based upon the levels of eligible accounts
receivable and inventories, as defined, subject to maximum borrowing of $4.0
million.
The borrowing arrangement with RG was amended and restated. The amendment
resulted in the funding of a new RG term loan of $840,000 on October 9, 1998 in
addition to the existing RG term loan that had $472,000 outstanding at October
9, 1998. RG's term loans are due in monthly principal installments of $40,000
through and until October 1, 1999 and $22,500 monthly, thereafter until the
maturity of the loan. The amount available for borrowings under the RG revolving
line-of-credit is based upon the levels of eligible accounts receivable and
inventories, as defined, subject to maximum borrowing of $1.5 million.
Effective January 1, 1999, borrowings under all term loans and both revolving
lines-of-credit bear interest at a rate per annum equal to the prime rate (7.75%
at February 28, 1999) plus 2.75% and 2.25%, respectively, and are secured by
substantially all of the Company's assets. The maturity date for all term loans
and both revolving lines-of-credit is September 30, 2001. On February 28, 1999,
the Company had $3,977,000 outstanding under the revolving lines-of-credit and
$949,000 available for additional borrowings.
Primarily as a result of merger-related expenses of $503,000 and a provision of
approximately $1.2 million for the loss on the sale of Roxxi, the Company
defaulted on certain bank covenants during the quarter ended February 28, 1999.
The violation of these covenants has been waived by the lender. In connection
with granting the waivers, the Company's lender increased the Company's
borrowing rate by 2% per annum effective January 1, 1999.
The Company's lender modified its covenants for the remainder of the fiscal year
ending May 31, 1999. The required debt service coverage ratio has been waived
through May 31, 1999 and the maximum monthly allowable net loss has been reduced
from breakeven to an aggregate net loss of $150,000 for the months of March,
April and May of 1999. In addition, the minimum annual net income requirement
for the fiscal year ending May 31, 1999 has been reduced from net income of
$400,000 to a net loss of $500,000. The modified covenants exclude all
merger-related expenses and the provision for the loss associated with the
disposition of Roxxi.
During the nine months ended February 28, 1999, net cash used in operating
activities was $0.7 million which primarily resulted from a net loss from
continuing operations of $0.7 million, a cash loss from operations of Roxxi of
$0.3 million and an increase in inventories of $1.7 million offset by a decrease
in accounts receivable of $1.0 million, an increase in accounts payable and
accrued expenses of $0.4 million and $0.7 million of depreciation and
amortization. The Company used $0.7 million in investing activities during the
nine months ended February 28, 1999, primarily for the purchase of additional
property, plant and equipment. The Company estimates that capital expenditures
for the fiscal year ended May 31, 1999 will be approximately $1.2 million.
Net cash provided by financing activities for the nine months ended February 28,
1999, was $1.4 million resulting from issuance of long term debt totaling $5.1
million and $0.5 million of net borrowings under lines of credit partially
offset by repayments of $4.2 million on the Company's term loans.
YEAR 2000 ASSESSMENT. The following Year 2000 discussion contains various
forward-looking statements that represent the Company's beliefs or expectations
regarding future events. When used in the Year 2000 discussion, the words
"believe", "expects", "estimates" and other similar expressions are intended to
identify forward-looking statements. Forward-looking statements include, without
limitation, the Company's expectations as to when it and its significant
distributors, customers and suppliers will complete the implementation and
compliance phases of the Year 2000 Plan, as well as its Year 2000 contingency
plans; and the Company's belief that its internal systems and equipment are Year
2000 compliant. All forward-looking statements involve a number of risks and
uncertainties that could cause the actual results to differ materially from the
projected results. Factors that may cause these differences include, but are not
limited to, the availability of qualified personnel and other information
technology resources; the ability to identify
-13-
<PAGE>
and rectify all date sensitive lines of code or to replace embedded chips in
affected systems or equipment; unanticipated delays or expenses related to
correction of the problems; and the actions of independent third-parties with
respect to Year 2000 problems. The statements in the following section include
"Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information
and Readiness Disclosure Act of 1998.
The Year 2000 problem refers to the inability of software to process date
information later than December 31, 1999. Date codes in many software programs
are abbreviated to allow only two digits for the year. Software with
date-sensitive functions that is not Year 2000 compliant may not be able to
distinguish whether "00" means 1900 or 2000. When that happens, some software
will not work at all and other software will suffer critical calculation and
other processing errors. Hardware and other products with embedded chips may
also experience problems.
The Company believes that its critical internal systems including versions of
Macola, ADP, Oracle, Microsoft Exchange, and Microsoft Office 97 products are
Year 2000 compliant. In addition, the Company tracks the version and updates
available for these products to ensure Year 2000 compliance.
The Company has completed a comprehensive evaluation of its internal systems and
equipment that addresses both information technology systems ("IT") (i.e.
business systems and the software development environment) and non-IT systems,
(i.e. elevators, building security and HVAC systems) including hardware,
software and firmware. In addition, the Company has completed the upgrade of
certain critical systems to meet with Year 2000 requirements. During the
previous two-year period, the Company has expended approximately $100,000 to
purchase and install new computer hardware and software resulting in all Company
hardware and software used for accounting purposes being Year 2000 compliant.
Expenses associated with evaluation of the Company's internal systems for Year
2000 problems have been approximately $20,000. The final phase of the internal
Year 2000 project has been completed with the conversion of the E-mail system to
Microsoft Exchange at a cost of $10,000. The Company believes that any future
internal Year 2000 costs will be immaterial.
Due to the Company's extensive internal Year 2000 analysis and subsequent
completion of the Year 2000 project, the Company has determined that an internal
contingency plan is unnecessary. The Company also is in the process of
conducting a review of its suppliers to determine that the suppliers' operations
and the products and services they provide are Year 2000 compliant. The Company
has already contacted its critical suppliers and utility providers for each of
its business units. All significant suppliers and utilities except one of the
Company's golf grip suppliers have indicated that their products and company are
Year 2000 compliant. The primary supplier of the Company's golf grips is
currently in the process of converting, upgrading, and correcting all known Year
2000 problems. This supplier is in the last phase of its plan to correct the
Year 2000 problems and has indicated that the project will be completed during
the second calendar quarter of 1999. The Company is closely monitoring the
status of this project and is assisting in its implementation.
The Company has no practical means to verify the information provided by these
independent third parties and is still pursuing those secondary distributors and
vendors who may not yet have responded. Based upon this assessment and where
practicable, the Company will attempt to mitigate its risks with respect to any
suppliers that may not meet the requirements, including seeking alternative
suppliers. However, there can be no assurance that the Company will not
experience disruptions in its ability to conduct business because of Year 2000
problems experienced by the Company's distributors or vendors, such problems
remain a possibility and could have an adverse impact on the Company's results
of operations and financial condition. To the extent that its key distributors
or vendors experience problems relative to achieving Year 2000 compliance, the
Company could suffer unanticipated revenue losses.
Some independent sales representatives that the Company uses may have
applications that are not Year 2000 compliant. The Company does not believe this
is a material concern since product orders are either manually written and
submitted via fax, or are submitted on a Company supplied automated order form
that is Year 2000 compliant.
Some commentators have predicted significant litigation regarding Year 2000
compliance issues. Because of the unprecedented nature of such litigation, it is
uncertain whether, or to what extent, the Company may be affected. However, at
this time the Company believes that it is not likely to have a material adverse
effect on the Company or its operations.
-14-
<PAGE>
BUSINESS ENVIRONMENT AND FUTURE RESULTS.
RELIANCE ON THIRD PARTY SUPPLIERS. RG currently purchases a majority of its
supply of non-cord grips from Acushnet Rubber Company ("Acushnet"). During the
transition to Acushnet beginning in December 1996, Acushnet experienced delays
and quality problems in the production of grips, which adversely affected RG's
customer relationships and results of operations.
During March 1999, RG received a letter from Acushnet terminating the
Manufacturing and Supply Agreement and Capital Lease Agreement. In the notice of
termination, Acushnet agreed to pay RG a $2.5 million termination fee at the end
of the transition period, to continue to produce grips for ten months and to pay
up to $100,000 for shipping and installing the manufacturing equipment at a new
location. In connection with the termination, RG will receive the manufacturing
equipment and Acushnet's obligation under the capital lease will be terminated.
At February 28, 1999, the Company's capital equipment lease receivable was
approximately $2.6 million. Also in the termination letter, Acushnet stated that
it would not continue paying the lease payments. The Company has not responded
to Acushnet's termination letter; however, the Company and legal counsel believe
that Acushnet's interpretation of the clause in the contract related to the
lease payments is without merit and the Company will pursue its rights under the
contract to receive lease payments throughout the transition period.
RG currently has no back-up source of supply; however, the Company is currently
in discussions with a number of grip manufacturers which the Company believes
can maintain RG's standard of product quality and will facilitate a smooth
transition. There can be no assurances that the Company will be able to secure a
source for grips on as favorable terms or with the same or better quality as
Acushnet. In addition, there can be no assurances that a transition to a new
supplier will not result in production delays, the loss of sales and key
customers which would materially affect RG's financial condition and results of
operations.
SALE OF ROXXI, INC. OPERATING ASSETS. During March 1999, the Company disposed of
the operating assets of Roxxi through two transactions with unrelated parties.
In one transaction, Roxxi sold its trade name, customer list, design database
and related computer software and hardware. In return, the Company will receive
a royalty of 16% of the buyer's net sales for the two-year period beginning May
1, 1999. In the second transaction, Roxxi sold its headwear manufacturing
equipment, headwear inventory and raw materials. Roxxi received $300,000 at
closing and the Company will receive a royalty of 2% of the buyer's net sales
until the buyer has paid an additional $200,000. Based on net headwear sales of
$3.0 million by Roxxi during the twelve months ended February 28, 1999, the
Company could recognize royalty revenue of approximately $0.5 million in each of
the next two fiscal years under these contracts. However, there can be no
assurance that the two successor companies will be able to achieve these sales
amounts in the future.
-15-
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
(3) Certificate of Incorporation and Bylaws
Exhibit 3.1. Amended and Restated Certificate of Incorporation of
FM Precision Golf Corp. (incorporated by reference to Annex IV to the
Company's Form S-4; No. 333-28841 (the "Form S-4")).
Exhibit 3.2. Bylaws of Royal Precision, Inc. (incorporated by
reference to Exhibit 3.2 to the Form S-4).
(4) Instruments Defining the Rights of Security Holders
Exhibit 4. 1. See Articles FOUR, FIVE and SEVEN of the Amended
and Restated Certificate of Incorporation of FM Precision Golf Corp.
(incorporated by reference to Exhibit 3.1 to the Form S-4).
Exhibit 4.2. See Article I, Sections 2.1 and 2.2 of Article II
and Section 7.3 of Article VII of the Bylaws of Royal Precision, Inc.
(incorporated by reference to Exhibit 3.2 to the Form S-4).
(10) Material Contracts
Exhibit 10.1. Agreement and Plan of Merger dated as of January
31, 1999 among Royal Precision, Inc., Coyote Sports, Inc. and RP
Acquisition Corp. (incorporated by reference to Exhibit 99.2 of the
Report on Form 8-K of the registrant dated February 3, 1999).
-16-
<PAGE>
Exhibit 10.2. Form of Certificate of Designation of the Series C
Preferred Stock (incorporated by reference to Exhibit 99.3 of the
Report on Form 8-K of the registrant dated February 3, 1999).
Exhibit 10.3. Amendment No. 1 to the Stockholder Agreement, dated
as of May 12, 1997, among Danny Edwards, Drew M. Brown, DMB Property
Ventures Limited Partnership, Mark N. Sklar, Bennett Dorrance, Trustee
of the Bennett Dorrance Trust dated April 21, 1989, as amended,
Christopher A. Johnston, Richard P. Johnston and Jayne A. Johnston
Charitable Remainder Trust #3 (Richard P. Johnston, Trustee), as
successor to RPJ/JAJ Partners, Ltd., a Wyoming partnership, David E.
Johnston, Berenson Minella & Company, L.P., Kenneth J. Warren and
Royal Precision (incorporated by reference to Exhibit 99.4 of the
Report on Form 8-K of the registrant dated February 3, 1999).
Exhibit 10.4. Form of Royal Precision Voting Agreement
(incorporated by reference to Exhibit 99.6 of the Report on Form 8-K
of the registrant dated February 3, 1999).
Exhibit 27.
Financial Data Schedule (submitted electronically for SEC
information only)
(b) Reports on Form 8-K.
Reports on Form 8-K were filed by the Registrant on January 20,
1999 and February 3, 1999 reporting other events under Item 5.
-17-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ROYAL PRECISION, INC.
Date April 13, 1999 By /s/ Thomas Schneider
- ------------------- ---------------------------------------
Thomas Schneider, President (duly
authorized officer)
By /s/ Kevin Neill
---------------------------------------
Kevin Neill, Vice President - Finance
(chief accounting officer)
-18-
<PAGE>
EXHIBIT INDEX
PAGE IN
SEQUENTIALLY
NUMBERED
EXHIBIT COPY
- ------- ----
3.1 Amended and Restated Certificate of Incorporation
of registrant (incorporated by reference to Annex
IV to the Company's Form S-4, No. 333-28841) (the
"Form S-4") *
3.2 Bylaws of Royal Precision, Inc. (incorporated by
reference to Exhibit 3.2 to the Form S-4) *
4.1 See Articles FOUR, FIVE and SEVEN of the Amended
and Restated Certificate of Incorporation of the
registrant (incorporated by reference to Exhibit
3.1 to the Form S-4. *
4.2 See Article I, Sections 2.1 and 2.2 of Article II
and Section 7.3 of Article VII of the Bylaws of
Royal Precision, Inc. (incorporated by reference to
Exhibit 3.2 to the Form S-4) *
10,1 Agreement and Plan of Merger dated as of January
31, 1999 among Royal Precision, Inc., Coyote
Sports, Inc. and RP Acquisition Corp. (incorporated
by reference to Exhibit 99.2 of the Report on Form
8-K of the registrant dated February 3, 1999). *
10.2 Form of Certificate of Designation of the Series C
Preferred Stock (incorporated by reference to
Exhibit 99.3 of the Report on Form 8-K of the
registrant dated February 3, 1999) *
10.3 Amendment No. 1 to the Stockholder Agreement, dated
as of May 12, 1997, among Danny Edwards, Drew M.
Brown, DMB Property Ventures Limited Partnership,
Mark N. Sklar, Bennett Dorrance, Trustee of the
Bennett Dorrance Trust dated April 21, 1989, as
amended, Christopher A. Johnston, Richard P.
Johnston and Jayne A. Johnston Charitable Remainder
Trust #3 (Richard P. Johnston, Trustee), as
successor to RPJ/JAJ Partners, Ltd., a Wyoming
partnership, David E. Johnston, Berenson Minella &
Company, L.P., Kenneth J. Warren and Royal
Precision (incorporated by reference to Exhibit
99.4 of the Report on Form 8-K of the registrant
dated February 3, 1999). *
10.4 Form of Royal Precision Voting Agreement
(incorporated by reference to Exhibit 99.6 of the
Report on Form 8-K of the registrant dated February
3, 1999) *
27. Financial Data Schedule (submitted electronically
for SEC information only)
*Incorporated by reference
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