<PAGE>
DRAFT 15 AUGUST, 1997
6:25 PM
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 June 30, 1997
Commission File Number 0-27994
BATTERIES BATTERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-383-5420
(State of other jurisdiction (IRS Employer
incorporation or organization) Identification No.)
711 Fifth Avenue
New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212) 223-1260
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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
As of August 14, 1997, there were 4,743,500 shares of common stock
outstanding.
<PAGE>
BATTERIES BATTERIES, INC.
FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1997
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Consolidated Financial Statements
Consolidated Balance Sheets .................................. 3
June 30, 1997 (unaudited) and December 31, 1996
Consolidated Statements of Income............................. 4
For the three and six months ended June 30, 1996
(unaudited) and 1997 (unaudited)
Consolidated Statements of Cash Flows......................... 5
For the six months ended June 30, 1996
(unaudited) and 1997 (unaudited)
Notes to the Consolidated Financial Statements ............... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................... 11
PART II - OTHER INFORMATION............................................ 15
<PAGE>
BATTERIES BATTERIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31 June 30,
1996 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,609 $ 772
Accounts receivable 2,730 6,719
Inventories 4,445 10,021
Prepaid expenses and other current assets 219 487
Current deferred income taxes 28 28
-------- --------
Total current assets 10,031 18,027
-------- --------
PROPERTY AND EQUIPMENT - Net 751 1,068
EXCESS OF COST OVER NET ASSETS ACQUIRED 615 5,611
OTHER ASSETS 337 380
-------- --------
TOTAL $11,734 $25,086
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 590 $ 63
Accounts payable 1,336 2,682
Accrued expenses 499 1,153
Redeemable Preferred Stock 750 0
Preferred dividends payable 35 0
Current portion of long-term bank debt 0 600
Current portion of obligations under capital leases 40 5
-------- --------
Total current liabilities 3,250 4,503
-------- --------
REVOLVING BANK CREDIT FACILITY 0 6,820
LONG-TERM BANK DEBT 0 2,150
OBLIGATIONS UNDER CAPITAL LEASES 7 9
DEFERRED INCOME TAXES AND OTHER DEFERRED CREDITS 17 9
STOCKHOLDERS' EQUITY
Common Stock, par value $.001, 10,000,000 shares
authorized, 4,000,000 shares and 4,743,500 shares,
respectively, issued and outstanding 4 5
Additional paid-in capital 8,000 10,716
Retained earnings 456 874
-------- --------
Total stockholders' equity 8,460 11,595
-------- --------
TOTAL $11,734 $25,086
======== ========
</TABLE>
See notes to consolidated inancial statements.
3
<PAGE>
BATTERIES BATTERIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------------- -----------------------------------
June 30, June 30, June 30, June 30,
1996 1997 1996 1997
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
NET SALES $6,197 $12,795 $12,376 $25,573
COST OF SALES 4,536 8,932 8,907 18,047
------------ ------------ ------------- -----------
Gross profit 1,661 3,863 3,469 7,526
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,474 3,383 3,001 6,435
------------ ------------ ------------ -----------
INCOME FROM OPERATIONS 187 480 468 1,091
INTEREST EXPENSE, NET -5 173 13 313
------------ ------------ ------------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 192 307 455 778
PROVISION FOR INCOME TAXES 74 143 156 345
------------ ------------ ------------- -----------
NET INCOME 118 164 299 433
PREFERRED STOCK DIVIDEND
REQUIREMENTS 10 0 30 15
------------ ------------ ------------- -----------
NET INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS $108 $164 $269 $418
============ ============ ============= ===========
NET INCOME PER SHARE $0.03 $0.04 $0.06 $0.09
============ ============ ============= ===========
WEIGHTED AVERAGE NUMBER OF COMMON &
COMMON EQUIVALENT SHARES OUTSTANDING 4,300,000 4,656,049 4,300,000 4,603,314
============ ============ ============= ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BATTERIES BATTERIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In 000's)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
June 30, 1996 June 30, 1997
---------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $299 $433
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & amortization expense 76 288
Deferred income tax 70 (8)
Changes in assets and liabilities:
Accounts receivable (314) (742)
Inventories (203) (484)
Prepaid expenses and other assets 27 31
Accounts payable and accrued expenses (224) 204
---------------- ---------------
Net cash provided (used) by operating activities (269) (278)
---------------- ---------------
INVESTING ACTIVITIES:
Purchase of property and equipment, net (223) (192)
Acquisition of Specific Energy, net of cash
acquired (55) 0
Acquisition of Battery Network, net of cash
acquired 0 (10,596)
Acquisition of Cliffco of Tampa Bay, net of cash
acquired 0 (942)
---------------- ---------------
Net cash used in investing activities (278) (11,730)
---------------- ---------------
FINANCING ACTIVITIES:
Borrowings under Term Loan Facility 0 3,000
Net borrowings under Revolving Credit Facility 0 6,820
Issuance of Common Stock in Battery Network
and Cliffco of Tampa Bay acquisitions 0 2,716
Proceeds from initial public offering, net of
expenses 9,134 0
Redemption of Preferred Stock (250) (750)
Payments to stockholders of Merger
Companies in connection with mergers (6,573) 0
Financing costs relating to the Battery Network
aquisition and Cliffco of Tampa Bay acquisitions 0 (179)
Payments under Term Loan Facility 0 (250)
Payments on debt and capital lease obligations (188) (1,186)
Payment of note payable to minority stockholders (180) 0
---------------- ---------------
Net cash provided by financing activities 1,943 10,171
---------------- ---------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,396 (1,837)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 946 2,609
---------------- ---------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD 2,342 $ 772
================ ===============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during period for:
Interest $ 48 $ 271
================ ===============
Income taxes $ 80 $ 247
================ ===============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BATTERIES BATTERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
In April 1996, effective June 30, 1996, Batteries Batteries, Inc. (the
"Company") acquired, by merger or stock acquisition (the "Mergers"),
simultaneously with the closing of its initial public offering of common stock
and redeemable warrants (the "Offering"), Advanced Fox Antenna, Inc.
("Advanced Fox") and Tauber Electronics, Inc. ("Tauber and collectively the
Merger Companies") for common stock and cash. These three companies are
referred to herein as the "Combined Companies." As a result of the substantial
continuing interests in the Company of the former stockholders of the Combined
Companies, the historical financial information of each of the Combined
Companies has been combined on a historical cost basis in accordance with
generally accepted accounting principles as if the Combined Companies had
always been members of the same operating group. In June 1995, the Company
acquired 95% of the outstanding common stock of Specific Energy Corporation
("Specific Energy") in a business combination accounted for as a purchase. (In
June 1996, the Company acquired the remaining minority 5% interest in cash).
On January 7, 1997, effective January 1, 1997, the Company acquired the
business and related assets of Battery Network, Inc. and affiliated companies
(see Note 2), an assembler and wholesale distributor of batteries servicing
specialty batteries customers nationally, in a business combination accounted
as a purchase. The results of operations of Battery Network are included in
the consolidated results of the Company from January 1, 1997, the effective
date of its acquisition.
On May 12, 1997, effective May 9, 1997, the Company acquired the business and
related assets of Cliffco of Tampa Bay, Inc. ("CTB") (see Note 2), a
distributor of cellular products operating out of Tampa, Florida, in a
business combination accounted for as a purchase. The results of operations of
CTB are included in the consolidated results of the Company from May 9, 1997,
the effective date of its acquisition.
The accompanying consolidated financial statements and related notes to the
consolidated financial statements are representative of what the financial
position, results of operations and cash flows would have been if the Combined
Companies, except for Battery Network and CTB, which are included,
respectively, from January 1, 1997, and May 9, 1997, the effective dates of
their acquisitions, had been combined at the beginning of fiscal 1996. The
assets and liabilities of the Combined Companies are reflected at their
historical amounts. As of the date of the Mergers, the capital stock of
Batteries Batteries, Inc. was treated as capital stock of the Company and the
capital stock of Advanced Fox and Tauber was included in additional paid-in
capital and their retained earnings have been reclassified to additional
paid-in capital.
6
<PAGE>
Effective during the quarter ending June 30, 1996, Batteries Batteries, Inc.
changed its fiscal year end from January 31, 1997 to December 31, 1996 in order
to conform with that of Tauber and Advanced Fox. Advanced Fox and Tauber
previously reported on a fiscal year ending December 31, 1996. Therefore, the
unaudited consolidated statements of income and cash flows presented herein for
the three and six months ended June 30, 1996 include the results of Advanced
Fox and Tauber for the three and six months ended June 30, 1996 and that of
Batteries Batteries, Inc. for the two and five months ended June 30, 1996.
The results of operations of the Combined Companies for the three and six
months ended June 30, 1996 reflect the combined historical operating results
of closely held Subchapter S and C corporations through the effective date of
the mergers, and do not include pro forma adjustments for income taxes,
officers' salaries or other items necessary for combining Subchapter S and C
corporations through such date. However, net income and net income per share
amounts would not have been materially different from the reported historical
amounts if such adjustments were included.
The accompanying consolidated financial statements as of June 30, 1997 and the
three and six months ended June 30, 1997 and June 30, 1996 are unaudited; but
in the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. All such adjustments are of a
normal recurring nature. Operating results for interim periods are not
necessarily indicative of results which may be expected for the year as a
whole. These consolidated financial statements should be read in conjunction
with the audited financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
2. ACQUISITIONS AND LOAN FACILITY
On January 7, 1997, effective January 1, 1997 the Company acquired (the " BN
Acquisition") the business and related assets of Battery Network, Inc. and
affiliated companies ("Battery Network"), which operates principally in
California, New Jersey and Illinois and had combined revenues of approximately
$23 million for the year ended December 31, 1996.
The purchase price of approximately $11.2 million consisted of (i)
approximately $8.3 million in cash, subject to adjustment to the extent that
the net worth, as defined, of Battery Network, exceeds or is less than $7.3
million; (ii) 550,000 shares of Common Stock valued at a price of $4.125 per
share and five year options to purchase an additional 225,000 shares at an
exercise price of $4.50 per share, and (iii) approximately $590,000 in
transaction costs.
7
<PAGE>
The Battery Network agreement also provides the sellers the contingent right
to receive additional consideration of up to $1 million in cash, 350,000
shares of Common Stock and five year options to acquire 250,000 shares of
Common Stock, of which half are exercisable at $4.50 per share and half are
exercisable at $6.00 per share. Payment of the additional consideration is to
be based on the excess amount by which the combined "per-tax income" as
defined of the Battery Network and Tauber, exceeds (i) $2,100,000 for the year
ending December 31, 1997 (the "One-Year Period"), (ii) $4,200,000 for the two
years ending December 31, 1998 (the "Two-Year Period") or (iii) $6,300,000 for
the three years ending December 31, 1999 (the "Three Year Period"), with the
maximum amount of additional consideration to be paid if the excess is
$400,000 for the One-Year Period, $800,000 for the Two-Year Period or
$1,200,000 for the Three-Year period. The sellers also entered into employment
agreements and were granted options under the Company's Stock Option Plan
purchase an aggregate of 75,000 shares of Common Stock.
On May 12, 1997, the Company acquired the business and related assets of
Cliffco of Tampa Bay, Inc. ("CTB"). The purchase price of approximately
$615,000 consisted of (i) cash of approximately $75,000 (ii) 193,000 shares
of common stock valued at $2.35 per share, or $446,985 and (iii)
approximately $93,000 in transaction costs. In addition, the Company assumed
liabilities of $1,162,000. As part of its assumption of liabilities, the Company
paid at the closing indebtedness of CTB of approximately $560,000. The CTB
agreement provides the president and sole stockholder of the seller with a
three-year employment agreement.
The cash portion of the purchase price of each transaction, as well as the
repayment of CTB debt of $560,000 to its collateralized lender was funded with
a portion of the proceeds of a borrowing pursuant to a Revolving Credit, Term
Loan and Security Agreement, dated January 6, 1997, as amended May 13, 1997,
(the "Loan Facility"), between IBJ Schroder Bank & Trust Company, as Agent
("IBJ") and the Company and all its subsidiaries. The Loan Facility consists
of a $3,000,000 Term Loan (the "Term Loan") payable in 35 monthly installments
of $50,000 each with the balance to be paid at maturity and a Revolving Credit
Facility (the "Revolver Loan") of up to $10,000,000 to be advanced at the rate
of 80% of eligible accounts receivable and 50% of inventories. The Revolver
Loans bears interest at the rate of 1/4 of 1% plus the higher of (i) the base
commercial lending rate of IBJ or (ii) the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers plus 1/4 of 1%, or, at the option of
the Company at the Eurodollar rate plus 2%. The Eurodollar rate is defined as
Libor for a designated period divided by one less the aggregate reserve
requirements. The interest on the Term Loan is 1/2% higher than the interest
rate on the Revolver Loans. The Loans Facility is secured by a pledge of the
assets of the borrowers and a pledge of the outstanding capital stock of the
subsidiaries of the Company. As of June 30, 1997, the principal amounts
outstanding of Term Loans was $2,750,000 and of the Revolver Loans was
$6,820,000.
Pursuant to the Management Agreement with Founders Management Services, Inc.
("Founders"), the Company paid Founders, for its origination and negotiating
services in connection with the acquisition of Battery Network and the loan
facility, $240,000 and issued to the designees of Founders five year warrants
to purchase 100,000 shares of Common Stock at a price of $4.125 per
8
<PAGE>
share and paid Founders in connection with the acquisition of CTB, $40,000.
The BN Acquisition and CTB Acquisition were accounted for as purchases in
accordance with Accounting Principles Board Opinion No. 16. The total purchase
price, net of cash acquired, was allocated to the assets acquired and
liabilities assumed based on their estimated fair values, are as follows:
(In Thousands)
Battery Network CTB
--------------- ---
Accounts receivable $ 2,522 $ 725
Inventories 4,679 412
Property and equipment 185 79
Other assets 177 32
Accounts payable and Accrued expenses and debt (1,307) (1,062)
Excess of cost over Net Assets Acquired 4,340 756
------- -------
Total $10,596 $ 942
======= =======
The excess of the cost over the net assets acquired will be amortized over a
period of 25 years. The results of operations of Battery Network and CTB are
included with those of the Company for the periods subsequent to the date of
acquisition.
The following unaudited pro forma summary data presents the consolidated
results of operations of the Company for the three and six months ended June
30, 1996, as if the BN and CTB acquisitions had been completed at the
beginning of 1996, and for the three and six months ended June 30, 1997 as if
the CTB acquisition had been completed at the beginning of 1997, and does not
purport to be indicative of what would have occurred had the acquisitions
actually been made as of such date or of results which may occur in the
future.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1997 1996 1997
------------------ ----------------
Net sales $13,600 $13,359 $26,400 $27,365
======= ======= ======= =======
Net income attributable to common
stockholders* $ 248 $ 129 $ 441 $ 418
======= ======= ======= =======
Income per share attributable to
common stockholders* $ .05 $ .03 $ .09 $ .09
======= ======= ======= =======
*Reflect adjustments for increased interest expense arising from acquisition
debt, amortization of Goodwill, changes in compensation to stockholder
officers, and related tax adjustments.
3. INITIAL PUBLIC OFFERING
On April 8, 1996, the Company completed its initial public offering (the
"Offering") of 2,300,000 shares of Common Stock at an initial public offering
price of $5.00 per share and 2,300,000 redeemable common stock purchase
warrants (the "Warrants") at $.10 per Warrant. The net
9
<PAGE>
proceeds to the Company net of underwriting discounts and Offering costs, were
approximately $9.1 million. Simultaneously with the closing of the Offering,
the Company issued 960,000 shares of Common Stock and options to purchase
50,000 shares of Common Stock and paid approximately $5.9 million in cash to
the former stockholders of the Merger Companies. In addition, the Company
subsequently paid an additional $.8 million in cash to the former stockholders
of the Merger Companies in connection with price adjustments stipulated in the
respective merger agreements. The cash consideration paid to the former
stockholders of the Merger Companies has been reflected as a reduction of
stockholders' equity in the consolidated financial statements. The remaining
cash proceeds from the Offering were used for general corporate purposes.
4. STOCKHOLDERS EQUITY
See Notes 1 and 2 for information as to the issuance in January, 1997 in
connection with the acquisition of Battery Network, of 550,000 shares of
Common Stock valued at $4.125 per share and five year options to purchase
225,000 shares of Common Stock an exercise price of $4.50 per share and the
issuance in May 1997 of 193,500 shares of Common Stock valued at $2.31 per
share upon the acquisition of CTB. The Company also issued in connection with
the BN Acquisition to designees of Founders Management Services Inc. warrants
to purchase 100,000 shares of Common Stock at a price of $4.125 per share.
10
<PAGE>
Item 2. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
The following table represents the Company's statement of operations data
expressed as a percentage of net sales for the respective periods:
Three Months Six Months
Ended June 30, Ended June 30,
--------------- --------------
1996 1997 1996 1997
---- ---- ---- ----
Net Sales 100% 100% 100% 100%
Cost of Sales 73.2 69.8 72.0 70.6
---- ---- ---- ----
Gross Profit 26.8 30.2 28.0 29.4
Selling, General &
Administrative Expenses 23.8 26.4 24.2 25.2
---- ---- ---- ----
Operating Income 3.0 3.8 3.8 4.2
Interest expense, net (.1) 1.4 .1 (1.2)
---- ---- ---- ----
Income before provision for
Income Taxes 3.1 2.4 3.7 3.0
---- ---- ---- ----
Income Taxes 1.2 1.1 1.3 1.3
---- ---- ---- ----
Net Income 1.9% 1.3% 2.4% 1.7%
==== ==== ==== ====
Three Months ended June 30, 1997 ("1997") Compared to Three Months Ended
June 30, 1996 ("1996")
Net sales increased 106% from $6.2 million in 1996 to $12.8 million in 1997.
The increase was primarily due to the acquisitions of Battery Network,
effective January 1, 1997, and CTB, effective May 12, 1997, contributing
respectively, $11.5 million and $.6 million of sales for the three months,
respectively, and the continued growth of Advanced Fox's cellular accessory
business (up 17.6% as compared to 1996).
Gross profit increased by $2.4 million from $1.7 million in 1996 to $3.9
million in 1997, and as a percentage of sales increased from 26.8% in 1996 to
30.2% in 1997. The bulk of the increase in dollars is attributable to the
acquisition of Battery Network ($1.7 million) and CTB ($.2 million) and to
increases in Advanced Fox of $.2 million. The increase in percentage is
attributable to the addition of
11
<PAGE>
Battery Network and CTB which carry higher gross margin percentages then the
other operation of the company taken as a whole, and improvement in Advanced
Fox overall margin percentage.
Selling, general and administrative ("SG&A") expenses increased by $1.8 million
from $1.5 million in 1996 to $3.4 million in 1997 but as a percentage of sales
decreased from 23.8% to 26.4%. The bulk of the increase in dollars is
attributable to: (i) the acquisition of Battery Network ($1.4 million) and the
acquisition of CTB $.2 million. (ii) general and administration costs
associated with being a publicly held company. (iii) an increase in marketing,
selling and distribution costs incurred by Advanced Fox and Specific Energy,
offset in part by costs reductions in the Tauber division, (iv) amortization
of Goodwill related to the Battery Network acquisition and (v) inclusion
of "SG&A" expenses of Batteries, Batteries for only the two months
ended June 30, 1996.
Interest expense, net increased from ($5000) in 1996 to $173,000 in 1997,
primarily due to interest on borrowings incurred in connection with the
acquisition of Battery Network in January 1997, and CTB in May 1997, and the
$750,000 redemption of the outstanding shares of Series A Preferred Stock.
Six Months Ended June 30, 1997 ("1997") Compared to Six Months Ended June
30, 1996 ("1996")
Net sales increased 107% from $12.4 million in 1996 to $25.6 million in 1997.
The increase was primarily due to the acquisitions of Battery Network,
effective January 1, 1997, and CTB, effective May 12, 1997, contributing
respectively, $11.5 million and $.6 million of sales for the six months, and
the continued growth of Advanced Fox's cellular accessory business (up
approximately 20% as compared to 1996).
Gross profit increased by $4.0 million from $3.5 million in 1996 to $7.5
million in 1997 and as a percentage of sales increased from 28% in 1996 to
29.4% in 1997. The bulk of the increase in dollars is attributable to the
acquisition of Battery network ($3.2 million) and CTB ($ .2 million) and to an
increase of $.6 million in Advanced Fox's gross profit.
("SG&A") expenses increased by 3.4 million from $3.0 million in 1996 to $6.4
million in 1997, and as a percentage of sales increased from 24.2% to 25.2%.
The bulk of the increase in dollars is attributable to; (i) the acquisition of
Battery Network ($2.8 million) and the acquisition of CTB $.2 million. (ii)
general and administration costs associated with being a publicly held company
and (iii) an increase in marketing, selling and distribution costs incurred by
Advanced Fox and Specific Energy, offset in part by costs reductions in the
Tauber division, (iv) amortization of Goodwill related to the Battery Network
acquisition and (v) inclusion of "SG&A" expenses of Batteries, Batteries
for only the five months ended June 30, 1996.
Interest expense, net, increased from ($13,000) in 1996 to $313,000 in 1997,
primarily due to interest on borrowings incurred in connection with the
acquisition of Battery Network in January 1997, and CTB in May 1997, and the
$750,000 redemption of the outstanding shares of Series A Preferred Stock.
12
<PAGE>
The Company's effective income tax rate increased from 31.2% in 1996 to 44.0%
in 1997. Prior to the Mergers, certain of the Founding Companies had operated
as Subchapter S Corporations under the Internal Revenue Code of 1986, as
amended. Upon consummation of the Mergers, effective June 30, 1996 the Company
files as a consolidated group for Federal income tax purposes. The income tax
provision for the six months ended June 30, 1997 reflects income taxes at an
estimated annual rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs have been to fund (i) the working capital
requirements necessitated by its sales growth, (ii) acquisitions and (iii)
prior to the initial public offering, distributions to its existing
stockholders primarily to satisfy their tax liabilities resulting from the S
Corporation status of certain of the Predecessor Companies. The Company's
primary sources of financing have been cash from operations, the initial
public offering and bank borrowings under the Loan Facility.
The Company's working capital as of June 30, 1997 was $13.5 million. For the
six months ended June 30, 1996 and 1997, net cash used by operating activities
was $.3 million. The difference results from several factors including the
increase in net income and changes in inventory, accounts receivable, accounts
payable and accrued expenses, prepaid expenses and other assets. Cash used for
additions to property and equipment were $223,000 for 1996 and $192,000 for
1997 periods, respectively. Cash used for investing activities of $11.1 million
in 1997 included the purchase price and related expenses net of cash acquired
relating to the acquisitions of Battery Network and CTB. The cash provided by
financing activities was $1.9 million in 1996, primarily due to the net
proceeds from the Offering. Of the $9.1 million net proceeds from the Offering,
$6.7 million was paid to the former stockholders of the Merger Companies. In
1997, cash provided by financing activities was $10.1 million principally
consisting of net borrowings of $9.7 million under the Revolving Credit, Term
Loan and Security Agreement. Financing activities in 1997 included: the
issuance of 550,000 shares of Common Stock at $4.125 per share, totaling
$2,269,000 to the Battery Network Sellers and finance costs of $148,000 related
to the Revolving Credit, Term Loan and Security Agreement, and (ii) the
issuance of 193,000 shares of Common Stock valued at $2.35 per share, totaling
$446,985 to the CTB Sellers, and financing costs of $30,000 expended in 1997
related to the amendment of the Revolving Credit, Term Loan and Security
Agreement, partially offset by (iii) payments of indebtedness of CTB of
$560,000 and of long-term debt of Advanced Fox of $590,000 and net
capital lease obligations of $28,000. The Company had at June 30,1997 cash and
cash equivalents of approximately $.8 million.
13
<PAGE>
On January 7, 1997, effective January 1, 1997 the Company acquired the business
and related assets of Battery Network, as discussed in (Note 2) "Acquisition
and Loan Facility" to the Consolidated Financial Statement.
The Company redeemed in April 1997 the outstanding 750,000 shares of Series A
Preferred Stock at the redemption price of $1.00 per share plus accrued
dividends at 8% per annum, a total of $800,000.
On May 12, 1997 the Company acquired the business and related assets of ("CTB")
as discussed in (Note 2) to the Consolidated Financial Statement.
The Preferred Stock redemption and the cash payments made in connection with
the BN Acquisition and CTB Acquisition were funded under the Company's
Revolving Credit, Term Loan and Security Agreement, as amended on May 12,
1997.
The Company estimates that it will incur additional capital expenditures of
approximately $1,000,000 during the twelve months ended June 30, 1998,
principally for the expansion and relocation of office and warehouse facilities,
acquisition of machinery and equipment used in the assembly of battery packs
and procurement of computer systems.
Based upon its present plans, management believes that operating cash flow,
available cash and available credit resources, will be adequate to make the
repayments of indebtedness described herein, to meet the working capital cash
needs of the Company and to meet anticipated capital expenditures needs during
the twelve month period. Although the Company intends to issue shares of
Common Stock as its primary method of financing acquisitions, it anticipates
that additional funds will be required to implement successfully its
acquisition program.
SEASONALITY AND INFLATION
The Company's net sales typically show no significant seasonal variations,
although net sales may be affected in the future by timing of acquisitions.
The impact of inflation on the Company's operations has not been significant
to date. However, there can be no assurance that a high rate of inflation in
the future would both have an adverse effect on the Company's operating
results.
14
<PAGE>
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits
(1) Copy of Amendment No. 1 and Joinder Agreement dated May 13, 1997 to
Revolving Credit, Term Loan and Security Agreement among IBJ Schroeder Bank
and Trust Company, as Agent, the Company and its subsidiaries.
(2) Financial Data Schedule.
b) Reports on Form 8-K No Report on Form 8-K was filed during the three
months ended June 30, 1997.
15
<PAGE>
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.
8/14/97 By: Ronald E. Badke /s/
------------------------- ---------------------------------
Date Ronald E. Badke
Chief Operating Officer and Chief
Financial Officer
8/14/97 By: John L. Teeger /s/
------------------------- ---------------------------------
Date John L. Teeger
Vice President, Secretary and Director
<PAGE>
AMENDMENT NO. 1 AND JOINDER AGREEMENT
THIS AMENDMENT NO. 1 AND JOINDER AGREEMENT ("Agreement") is entered
into as of May 9th, 1997, by and among Batteries Batteries, Inc. ("BATS"),
Tauber Electronics, Inc. ("TEI"), Advanced Fox Antenna, Inc. ("AFA"), Specific
Energy Corporation ("SEC"), W.S. Battery & Sales Company, Inc. ("WSBS"),
Battery Network, Inc. ("BN"), Battery Acquisition Corp. ("BAC"), Cliffco of
Tampa Bay, Inc. (formerly known as Cellular Florida Acquisition, Inc.) ("CTB")
(BATS, TEI, AFA, SEC, WSBS, BN, BAC and CTB, each a "Borrower" and, jointly
and severally, the "Borrowers") and IBJ Schroder Bank and Trust Company, as
Lender and Agent (as such terms are hereinafter defined).
BACKGROUND
BATS, TEI, AFA, SEC, WSBS, BN and BAC, IBJ Schroder Bank and Trust
Company ("IBJS"), each of the other financial institutions named in the Loan
Agreement (as hereinafter defined) or which hereafter become parties thereto
(IBJS and such financial institutions, the "Lenders") and IBJS as agent for
the Lenders (IBJS in such capacity, the "Agent") are parties to a Revolving
Credit, Term Loan and Security Agreement dated as of January 7, 1997 (as
amended, supplemented, modified or restated from time to time, the "Loan
Agreement") pursuant to which Lenders and Agent provided Borrowers (other than
CTB) with certain financial accommodations.
Pursuant to an Asset Purchase Agreement dated April 27, 1997 by and
among BATS, Cellular Florida Acquisition, Inc., a wholly owned subsidiary of
BATS ("Sub"), Cliffco of Tampa Bay, Inc. (now known as Costilow Communications
and Accessories, Inc.) ("Seller") and David Costilow, the stockholder of
Seller (the "Purchase Agreement"), Seller sold to Sub and Sub purchased from
Seller certain assets of Seller. Following such acquisition, Sub changed its
name to Cliffco of Tampa Bay, Inc.
BATS, TEI, AFA, SEC, WSBS, BN and BAC have requested that Agent and
Lenders permit CTB to become a Borrower and provide financial accommodations
to CTB under the Loan Agreement and Agent and Lenders are willing to do so on
the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by
Agent or Lenders and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Joinder.
(a) CTB is hereby added as an additional Borrower under the
Loan
<PAGE>
Agreement, and all references to "Borrower" or "Borrowers" thereunder shall
henceforth be deemed to include CTB.
(b) CTB hereby adopts the Loan Agreement and each of the
Other Documents and assumes in full, and acknowledges that it is jointly and
severally liable for, the payment, discharge, satisfaction and performance of
all Obligations under the Loan Agreement and the Other Documents. Without
limiting the generality of the foregoing, in order to secure the prompt
payment and performance of the Obligations, CTB hereby assigns, pledges and
grants to Agent for the benefit of Lenders a continuing security interest in
and to all of its Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located.
3. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 4 below, the Loan Agreement is
hereby amended as follows:
(a) Section 1.2 is hereby amended by
(i) adding the following defined terms in their appropriate
alphabetical order:
"Amendment No. 1" shall mean Amendment No. 1 and
Joinder Agreement dated as of May 9th, 1997 among
Borrowers, Lenders and Agent.
"Amendment No. 1 Effective Date" shall mean May
9th, 1997.
"Amendment No. 1 Projections" shall have the
meaning set forth in Section 5.5(c) hereof.
"CTB" shall mean Cliffco of Tampa Bay, Inc.
(formerly known as Cellular Acquisition, Inc.), a
Florida corporation.
"CTB Acquisition Agreement" shall mean the Asset
Purchase Agreement dated as of April 27th, 1997
among BATS, Cellular Florida Acquisition, Inc. (now
known as Cliffco of Tampa Bay, Inc.), Old Cliffco,
as seller and David Costilow, as Stockholder.
"Old Cliffco" shall mean Cliffco of Tampa Bay,
Inc., a Florida corporation, now known as Costilow
Communications and Accessories, Inc.
(ii) amending the following defined term in its entirety
to provide as follows:
"Acquisition Agreement" shall mean collectively,
the BN Acquisition Agreement, the WSBS Acquisition
Agreement, the BAC Acquisition Agreement and the
CTB Acquisition Agreement.
(b) Section 5.5 is amended by adding the following subsection (c)
after the end of subsection (b):
-2-
<PAGE>
"(c) The twelve-month cash flow projections of BATS
on a consolidated basis and their projected balance
sheets as of the Amendment No. 1 Effective Date,
copies of which are attached as Exhibit 5.5(c) to
Amendment No. 1 (the "Amendment No. 1 Projections")
were prepared by Borrowing Agent, reflect the
consummation of the transaction contemplated by
Amendment No. 1 and the CTB Acquisition Agreement,
are based on underlying assumptions which provide a
reasonable basis for the projections contained
therein."
(c) Section 5.8 is amended by adding after the end of Section 5.8(e)
a new Section 5.8(f) which provides as follows:
"(e) After giving effect to the transactions
contemplated by Amendment No. 1 and the Cliffco
Acquisition Agreement, each Borrower will be
solvent, able to pay its debts as they mature, have
capital sufficient to carry on its business and all
businesses in which it is about to engage, and (i)
as of the Amendment No. 1 Effective Date, the fair
present saleable value of its assets, calculated on
a going concern basis, is in excess of the amount
of its liabilities and (ii) subsequent to the
Amendment No. 1 Effective Date, the fair saleable
value of its assets (calculated on a going concern
basis) will be in excess of the amount of its
liabilities."
(d) Section 5.24 is added after the end of Section 5.23 and provides
as follows:
"5.24. Delivery of CTB Acquisition Agreement. Agent
has received complete copies of the CTB Acquisition
Agreement, including all exhibits, schedules and
disclosure letters referred to therein or delivered
pursuant thereto and all amendments thereto,
waivers relating thereto and other side letters or
agreements affecting the terms thereof. None of
such documents and agreements has been amended or
supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written
agreement or instrument which has heretofore been
delivered to Agent."
(e) Section 7.1(a) is amended in its entirety to provide as follows:
"(a) Enter into any merger, consolidation or other
reorganization with or into any other Person other
than a Borrower or acquire all or a substantial
portion of the assets or stock of any Person other
than a Borrower and other than the assets of Old
Cliffco in accordance with the CTB Acquisition
Agreement or permit any other Person to consolidate
with or merge with it other than a Borrower."
(f) Section 7.12(a) is amended in its entirety to provide as follows:
-3-
<PAGE>
"(a) Form any Subsidiary, except that BATS may
form CTB."
(g) Section 16.3(b) is hereby amended by adding the following
parenthetical immediately after "any Transferee" on the
tenth line thereof:
"(other than to a Transferee that is an affiliate
or subsidiary of IBJS)"
(h) Section 16.3(c is amended by adding the following sentence
at the end thereof:
"Without in any manner limiting the foregoing, the
Borrowers specifically consent to the sale,
assignment and/or transfer by IBJS to IBJ Schroder
Business Credit Corporation of all or any part of
its rights and obligations under this Agreement and
the Other Documents in its capacity as Agent and as
Lender."
(i) Exhibit 2.1(a) is amended in its entirety to provide as set forth
on Exhibit A attached to this Agreement.
(j) Exhibit 2.4 is amended in its entirety to provide as set forth on
Exhibit B attached to this Agreement.
(k) Schedule 4.5 (Equipment and Inventory Locations) is amended by
adding the following at the end thereof:
"(o) 12816 Dupont Circle, Tampa, Florida 33626 (until
6/30/97)
(p) 201 Vollmer Avenue, Oldsmar, Florida 34677 (commencing
7/1/97)"
(l) Schedule 4.15(c) (Location of Executive Offices) is amended by
adding the following at the end thereof:
"(h) Cliffco of Tampa Bay, Inc.
(i) 12816 Dupont Circle
Tampa, Florida 33626
(until June 30, 1997)
(ii) 201 Vollmer Avenue
Oldsmar, Florida 34677
(commencing July 1, 1997)"
(m) Schedule 5.2(a) (States of Qualification/Good Standing) is
amended by adding the following at the end thereof:
-4-
<PAGE>
"Cliffco of Tampa Bay, Inc. - Florida"
(n) Schedule 5.2(b) (Subsidiaries) is amended by adding the following
at the end of the first section thereof:
"(e) Cliffco of Tampa Bay, Inc."
(o) Schedule 5.4(b) (Federal Tax Identification Numbers) is amended
by adding the following at the end of the first section thereof:
"(h) Cliffco of Tampa Bay, Inc. -- 65-0750742
(p) Schedule 5.6 (Prior Names) is amended by adding the following at
the end thereof:
"(f) Cliffco of Tampa Bay, Inc. was previously "Cellular
Florida Acquisition, Inc." The amendment to the
Certificate of Incorporation was filed on the
Amendment No. 1 Effective Date. Cliffco of Tampa
Bay, Inc. uses the tradename "Cliffco"."
(q) Schedule 5.9 (Intellectual Property, Source Code, Escrow
Agreements) is amended by adding the following at the end thereof:
""Accessory Solutions for a Wireless World" trademark
registration application file no: 3-11-96, filed: 75/069,921
"Your Phone" trademark registration application, file no:
75/203,707, filed: 11-25-96
"Starter Kit" trademark registration application, file no:
75/227,177, filed: 1-16-97
"Starter Kit 2" trademark registration application,
75/227,178, filed: 1-16-97
4. Conditions of Effectiveness. This Agreement shall become effective
upon satisfaction of the following conditions precedent:
(i) Agent shall have received in form and substance
satisfactory to Lender four (4) copies of this Agreement duly
executed by each Borrower;
(ii) Agent shall have received in form and substance
satisfactory to Agent an executed Purchase Agreement and all exhibits
and schedules thereto and all other documents and agreements executed
in connection therewith;
-5-
<PAGE>
(iii) BATS and/or CTB shall have obtained all necessary
consents with respect to each contract, lease, and agreement being
assigned to CTB pursuant to the Purchase Agreement. BATS and CTB
hereby covenant that no conditions to effectiveness of the Purchase
Agreement shall be waived by BATS or CTB without Agent's prior
written consent;
(iv) Agent shall have received an executed Amended and
Restated Term Note in the form attached hereto as Exhibit A and (b)
Amended and Restated Revolving Credit Note in the form attached
hereto as Exhibit B;
(v) Agent shall have received in form and substance
satisfactory to Agent a Collateral Assignment executed by BATS with
respect to its rights under the Purchase Agreement;
(vi) Each document (including, without limitation, any
Uniform Commercial Code financing statement) required by this
Agreement or under law or reasonably requested by Agent to be filed,
registered or recorded in order to create, in favor of Agent for the
ratable benefit of the Lenders, a perfected security interest in or
lien upon the Collateral owned by CTB shall have been properly filed,
registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and
Agent shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or
expense relating thereto;
(vii) Agent shall have received a copy of the resolutions in
form and substance reasonably satisfactory to Agent, of the Board of
Directors of (x) CTB authorizing (1) the execution, delivery and
performance of this Agreement and (2) the granting by CTB of the
Liens upon the Collateral, certified by the Secretary or an Assistant
Secretary of CTB as of the date of this Agreement; and (y) of BATS,
TEI, AFA, SEC, WSBS, BN and BAC authorizing (1) the execution,
delivery and performance of this Agreement and (2) the addition of
CTB as a "Borrower" under the Loan Agreement; and, such certificates
shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such
certificate;
(viii) Agent shall have received a copy of the Articles or
Certificate of Incorporation of CTB, and all amendments thereto,
certified by the Secretary of State or other appropriate official of
its jurisdiction of incorporation together with copies of the By-Laws
of CTB certified as accurate and complete by the Secretary or an
Assistant Secretary of CTB;
(ix) Agent shall have received good standing certificates
for CTB dated not more than thirty (30) days prior to the date of
this Agreement, issued by the Secretary of State or other appropriate
official of CTB's jurisdiction of incorporation and each jurisdiction
where the conduct of CTB's business activities or the ownership of
its
-6-
<PAGE>
properties necessitates qualification;
(x) Agent shall have received the executed legal opinions of
Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC in form and
substance satisfactory to Agent regarding the due authorization,
enforceability and validity of (i) this Agreement and (ii) the
Purchase Agreement, and the transactions contemplated herein and
therein;
(xi) Agent shall have received in form and substance
satisfactory to Agent, certified copies of CTB's casualty insurance
policies, together with loss payable endorsements on Lender's
standard form of loss payee endorsement naming Agent as loss payee,
and certified copies of CTB's liability insurance policies, together
with endorsements naming Agent as a co-insured;
(xii) Agent shall have received in form and substance
satisfactory to Agent all landlord, mortgagee or warehousemen
agreements for CTB's existing premises at 12816 Dupont Circle, Tampa,
Florida and future premises at 201 Vollmer Avenue, Oldsmar, Florida;
(xiii) Agent shall have received the stock certificate issued
by CTB in favor of BATS, along with an executive stock power which
shall be pledged to Agent under and pursuant to the Pledge Agreement
dated January 7, 1997 by and between Agent and BATS;
(xiv) (A) No litigation, investigation or proceeding before
or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors
of any Borrower (x) in connection with this Agreement or any of the
Transactions contemplated by the CTB Acquisition Agreement and which,
in the reasonable opinion of Agent, is deemed material or (y) which
if adversely determined, would, in the reasonable opinion of Agent,
have a Material Adverse Effect on Borrowers taken as a whole; and (B)
no injunction, writ, restraining order or other order of any nature
materially adverse to any Borrower, or the conduct of the business of
any Borrower, or inconsistent with the due consummation of this
Agreement or the CTB Acquisition Agreement shall have been issued by
any Governmental Body;
(xv) Agent shall have received an executed Financial
Condition Certificate satisfactory in form and substance to it,
certifying the solvency of Borrowers on a consolidated basis after
giving effect to the transactions contemplated by this Agreement and
the CTB Acquisition Agreement and as to Borrowers' financial
resources and their ability to meet their obligations and liabilities
as they become due;
(xvi) Agent shall have completed Collateral examinations,
the results of which shall be satisfactory in form and substance to
Agent, of the Receivables, Inventory and General Intangibles of CTB
and all books and records in connection therewith;
-7-
<PAGE>
(xvii) Agent shall have received a copy of the Amendment No.
1 Projections which shall be satisfactory in all respects to Agent;
(xviii) Agent shall have received duly executed agreement(s)
establishing the Blocked Account(s) with financial institutions
reasonably acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral of CTB;
(xix) Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated
by this Agreement; and, Agent shall have received such Consents and
waivers of such third parties as might assert claims with respect to
the Collateral, as Agent and its counsel shall deem necessary;
(xx) (A) Since January 7, 1997 there shall not have occurred
(x) any material adverse change in the financial condition,
operations, properties or prospects of Borrowers taken as a whole and
Old Cliffco, (y) any material damage or destruction to any of the
Collateral nor any material depreciation in the value thereof and (z)
any event, condition or state of facts which would reasonably be
expected to have a Material Adverse Effect on Borrowers taken as a
whole and Old Cliffco and (B) no representations made or information
supplied to Agent shall have been proven to be inaccurate or
misleading in any material respect;
(xxi) Agent shall have received a closing certificate signed
by the Chief Financial Officer of each Borrower dated as of the date
hereof, stating that (A) all representations and warranties set forth
in the Loan Agreement and the Other Documents are true and correct in
all material respects on and as of such date, (B) Borrowers are on
such date in compliance with all the terms and provisions set forth
in the Loan Agreement and the Other Documents and (C) on such date no
Default or Event of Default has occurred or is continuing;
(xxii) Agent shall have received a duly executed collateral
assignment of the rights of each of BATS and CTB under the CTB
Acquisition Agreement, in form and substance satisfactory to Lender;
(xxiii) Agent shall have reviewed all material contracts of
CTB including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and
distributorship agreements and such contracts and agreements shall be
satisfactory in all respects to Agent; and
(xxiv) Agent shall have received such other certificates,
instruments, documents and agreements as may reasonably be required
by Agent or its counsel, each of which shall be in form and substance
satisfactory to Agent and its counsel.
5. Representations and Warranties. Each Borrower hereby represents
and warrants as follows:
-8-
<PAGE>
(a) This Agreement and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of Borrowers
and are enforceable against Borrowers in accordance with their
respective terms.
(b) Upon the effectiveness of this Agreement, such Borrower
(other than CTB) hereby reaffirms and CTB affirms all covenants,
representations and warranties made in the Loan Agreement to the
extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have
been remade as of the effective date of this Agreement.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Agreement.
(d) Such Borrower has no defense, counterclaim or offset
with respect to the Loan Agreement.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain in
full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any right, power or remedy
of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments or agreements executed
and/or delivered under or in connection therewith.
7. Governing Law. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the
laws of the State of New York.
8. Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
9. Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto, on
separate counterparts, all of which when so executed shall be deemed
an original, but all such counterparts shall constitute one and the
same agreement. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.
-9-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first written above.
BATTERIES BATTERIES, INC., as Borrower and
Borrowing Agent
By:
---------------------------------
Title:
------------------------------
TAUBER ELECTRONICS, INC., as Borrower
By:
---------------------------------
Title:
------------------------------
ADVANCED FOX ANTENNA, INC., as Borrower
By:
---------------------------------
Title:
------------------------------
SPECIFIC ENERGY CORPORATION, as
Borrower
By:
---------------------------------
Title:
------------------------------
BATTERY NETWORK, INC., as Borrower
By:
---------------------------------
Title:
------------------------------
W.S. BATTERY & SALES COMPANY, INC., as
Borrower
By:
---------------------------------
Title:
------------------------------
-10-
<PAGE>
BATTERY ACQUISITION CORP., as Borrower
By:
---------------------------------
Title:
------------------------------
CLIFFCO OF TAMPA BAY, INC., as Borrower
(f/k/a Cellular Florida Acquisition, Inc.)
By:
---------------------------------
Title:
------------------------------
IBJ SCHRODER BANK & TRUST COMPANY,
as Agent and Lender
By:
---------------------------------
Title:
------------------------------
-11-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the unaudited
consolidated balance sheet as of June 30, 1997, and the unaudited statement of
income for the six months then contained in the report on Form 10-Q for the six
months ended June 30, 1997, of Batteries Batteries, Inc. and is qualified in its
entirety be reference to such financial statements:
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 772
<SECURITIES> 0
<RECEIVABLES> 7,206
<ALLOWANCES> 402
<INVENTORY> 10,021
<CURRENT-ASSETS> 18,239
<PP&E> 1,068
<DEPRECIATION> 131
<TOTAL-ASSETS> 25,298
<CURRENT-LIABILITIES> 4,705
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 11,605
<TOTAL-LIABILITY-AND-EQUITY> 25,298
<SALES> 25,573
<TOTAL-REVENUES> 25,573
<CGS> 18,047
<TOTAL-COSTS> 18,047
<OTHER-EXPENSES> 6,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 313
<INCOME-PRETAX> 778
<INCOME-TAX> 335
<INCOME-CONTINUING> 445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 443
<EPS-PRIMARY> $0.10
<EPS-DILUTED> $0.10
</TABLE>
