SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
Amendment No. 2
to
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 7, 1998
Date of Report (date of earliest event reported)
BOATRACS, INC.
(Exact Name of Registrant as Specified in its Charter)
California 0-11038 33-0644381
(State or Other (Commission (IRS Employer Iden-
Jurisdiction of File Number) tification Number)
Incorporation)
10675 Sorrento Valley Road, Suite 200
San Diego, California 92121
(Address of Principal Executive Offices
Including Zip Code
(619) 657-0100
(Registrant's Telephone Number,
Including Area Code)
The undersigned Registrant presents Amendment No. 2 to its current report
on Form 8-K/A to reflect the effects of the First Amendment to the Agreement
and Plan of Reorganization as follows:
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
On July 7, 1998, Boatracs, Inc., a California corporation (the
"Company") acquired Enerdyne Technologies, Inc., a California corporation
("ET, Inc"). The acquisition was effected by means of a merger whereby ET,
Inc. was merged with and into the Company's wholly owned subsidiary, Boatracs
Acquisition, Inc., a California Corporation ("Boatracs Acquisition").
Boatracs Acquisition has changed its name to Enerdyne Technologies Inc.
("Enerdyne") and will continue ET, Inc's business of providing versatile,
high performance digital video compression products to the Government and
commercial markets.
Pursuant to the terms of an Agreement and Plan or Reorganization, as
amended, dated as of July 7, 1998 (the "Merger Agreement"), by and between
the Company, ET Inc., and the shareholders of ET Inc., the merger
consideration paid to the shareholders of ET Inc., which was agreed upon
between the parties in arm's length negotiations, consisted of an aggregate
of (i) $1,953,800 in cash, (ii) $7,815,200 principal amount of senior
promissory notes payable on July 7, 1999 and bearing interest at 8.5%
per annum ("Senior Notes"), (iii) $1,953,800 principal amount of subordinated
promissory notes ("Subordinated Notes") with specified minimum annual payments
and any remaining amounts payable June 30, 2002 and bearing interest of 8.5%
per annum, (iv) 2,930,700 shares of Common Stock of the Company and
(v) warrants ("Warrants") expiring on June 30, 2002 to purchase 488,450 shares
of Common Stock of the Company at a purchase price of $2.00 per share.
Subject to terms and conditions stated therein, the Senior Notes are secured
by all of the assets of ET Inc. and two of the Company's directors, officers
and significant shareholders each severally guaranteed one-third of the
unpaid principal balance of the Senior Notes as of July 7, 1999. The Company
also agreed to satisfy the obligations of ET Inc. regarding payments to its
financial advisors through delivery of $46,200 in cash, $184,800 of Senior
Notes, $46,200 of Subordinated Notes, 69,300 shares of Common Stock and
Warrants for the purchase of 11,550 shares of Common Stock.
A First Amendment to the Agreement and Plan of Reorganization ("Amendment")
effective July 7, 1998 was executed by the parties on November 11, 1998.
The Amendment provides that if at least 50% of the principal amount due under
the certain Senior Promissory Notes (defined in the Agreement and Plan of
Reorganization) payable to the former shareholders of Enerdyne
(the "Former Shareholders") then: (a) the Non-statutory Stock Option Agreement
between the Company and the Former Shareholders is amended by revising, in
accordance with specified formulas, the number of option shares and the
exercise price; (b) the Guaranty in favor of the Former Shareholders executed
by two of the Company's directors, officers and principal shareholders is
amended. If the prepayment is not made in accordance with the Amendment, the
Company will issue 500,000 options to each of the Former Shareholders at an
exercise price of $2.00 per share.
The funds for the cash payment were generated by the sale of a promissory note
payable to the Company from the Company's president to an outside party and
from working capital.
<PAGE>
ENERDYNE TECHNOLOGIES, INC.
Financial Statements for the Nine-Month
Period Ended March 31, 1998 and for the
Fiscal Year Ended June 30, 1997
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Enerdyne Technologies, Inc.:
We have audited the accompanying balance sheets of Enerdyne
Technologies, Inc. (the "Company") as of March 31, 1998 and June 30,
1997, and the related statements of income and retained earnings and of
cash flows for the nine-month period ended March 31, 1998 and for the
year ended June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Company at March 31,
1998 and at June 30, 1997, and the results of its operations and its
cash flows for the above-stated periods in conformity with generally
accepted accounting principles.
/S/DELOITTE & TOUCHE LLP
San Diego, CA
July 31, 1998
<PAGE>
ENERDYNE TECHNOLOGIES, INC.
BALANCE SHEET
MARCH 31, 1998 AND JUNE 30, 1997
March 31, June 30,
ASSETS 1998 1997
CURRENT ASSETS:
Cash and cash equivalents $1,131,516 $397,353
Accounts receivable 1,011,002 515,506
Inventory 584,834 720,437
Deferred income taxes 79,866 47,685
Other receivables 68,200
--------- ---------
Total current assets 2,807,218 1,749,181
PROPERTY - NET 342,070 368,947
OTHER ASSETS 5,775 5,775
--------- ---------
TOTAL $3,155,063 $2,123,903
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $156,880 $345,896
Accrued expenses 678,049 1,068,437
Income taxes payable 478,919
------- ---------
Total current liabilities 1,313,848 1,414,333
DEFERRED INCOME TAX LIABILITY 33,960 2,865
COMMITMENTS (Note 7)
STOCKHOLDERS' EQUITY:
Preferred stock, no par value - 10,000
shares authorized, 500 500
issued and outstanding
Common stock, no par value - 1,000,000
shares authorized, 20,000 shares issued
and outstanding 20,000 20,000
Retained earnings 1,786,755 686,205
--------- -------
Total stockholders' equity 1,807,255 706,705
--------- -------
TOTAL $3,155,063 $2,123,903
========= =========
See notes to financial statements.
<PAGE>
ENERDYNE TECHNOLOGIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE NINE-MONTH PERIOD ENDED MARCH 31, 1998 AND
THE YEAR ENDED JUNE 30, 1997
Nine-Months Year
Ended Ended
March 31, June 30,
1998 1997
NET SALES $5,098,545 $5,794,128
COST OF SALES (1,183,922) (1,938,816)
--------- ---------
Gross profit 3,914,623 3,855,312
--------- ---------
OPERATING EXPENSES:
General and administrative 1,506,411 3,022,332
Research and development 218,825 266,101
Selling and marketing 543,170 356,307
------- -------
Total operating expenses 2,268,406 3,644,740
--------- ---------
INCOME FROM OPERATIONS 1,646,217 210,572
--------- -------
OTHER INCOME:
Interest and other income 14,923 25,176
------ ------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,661,140 235,748
PROVISION FOR INCOME TAXES (560,590) (72,951)
------- ------
NET INCOME 1,100,550 162,797
RETAINED EARNINGS, BEGINNING OF PERIOD 686,205 528,408
COMMON STOCK DIVIDENDS PAID (5,000)
------- -----
RETAINED EARNINGS, END OF PERIOD $1,786,755 $686,205
========= =======
See notes to financial statements.
<PAGE>
ENERDYNE TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE-MONTH PERIOD ENDED MARCH 31, 1998 AND
THE YEAR ENDED JUNE 30, 1997
Nine-Months Year
Ended Ended
March 31, June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,100,550 $162,797
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 60,173 62,113
Changes in operating assets and liabilities:
Accounts receivable (427,296) 42,641
Inventory 135,603 (4,189)
Deferred income taxes (1,086) 71,180
Accounts payable (189,016) 149,915
Accrued expenses (390,388) 324,516
Income taxes payable 478,919 (290,773)
------- -------
Net cash provided by operating
activities 767,459 518,200
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property (33,296) (221,485)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (5,000)
-----
NET INCREASE IN CASH 734,163 291,715
CASH, BEGINNING OF PERIOD 397,353 105,638
------- -------
CASH, END OF PERIOD $1,131,516 $ 397,353
========= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $8,793 $735
===== ===
Income taxes paid $79,744 $310,325
====== =======
See notes to financial statements.
<PAGE>
ENERDYNE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD JULY 1, 1997 TO MARCH 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations - Enerdyne Technologies, Inc. (the "Company") was
incorporated in California in December 1984. The Company develops and
manufactures high performance digital video compression products.
On July 7, 1998, the Company was acquired by Boatracs, Inc. ("Boatracs")
for $22,580,000 to be paid in the form of cash, notes payable and
Boatracs' common stock and warrants for common stock.
Cash and Cash Equivalents - Cash equivalents consist of highly liquid
investments purchased with a maturity of three months or less.
Accounts Receivable - In the opinion of management, substantially all
accounts receivable are collectible. Accordingly, no allowance
for doubtful accounts was considered necessary at March 31, 1998
and June 30, 1997.
Inventories - Inventories are carried at the lower of average cost or
market.
Property - Property is stated at cost. Depreciation and amortization
are provided using the straight-line method over the estimated useful
lives of the assets, generally six to ten years.
Revenue Recognition - Sales of standard video compression units which do
not entail significant customer modification are recognized upon
shipment of products to customers. Revenues related to contracts
involving significant customer modifications or the development of new
technologies are accounted for using the percentage-of-completion
method, primarily based upon specific contract deliverables. Products
are subject to a right of return for one year. An allowance for
estimated future returns is recorded at the time of shipment based on
historical returns. Actual return experience has not been significant.
Income Taxes - The liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected
to reverse.
Concentration of Credit Risk - The Company invests its excess cash in
certificates of deposit. The Company has not experienced any losses on
its certificates of deposit.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results may
differ from those estimates.
Significant Customers - Sales to two customers comprised greater than
10% of the Company's total revenues for the nine-month period ended
March 31, 1998. Revenues earned from these customers were $1,283,000
and $788,000, respectively. Receivables from these customers totaled
$243,000 and $346,000, respectively, at March 31, 1998.
Sales to one customer comprised greater than 10% of the Company's total
revenues for the year ended June 30, 1997. Revenue earned from this
customer was $853,635. No amounts were receivable from this customer at
June 30, 1997.
2. INVENTORY
Inventory consists of the following:
March 31, June 30,
1998 1997
Raw materials $425,842 $361,805
Work in process 138,523 358,632
Finished goods 20,469
------ -------
Total $584,834 $720,437
======= =======
3. PROPERTY - NET
Property consists of the following:
March 31, June 30,
1998 1997
Machinery and equipment $401,644 $388,858
Computer equipment 131,411 112,966
Furniture and fixtures 31,307 31,307
Leasehold improvements 27,300 25,235
------ ------
591,662 558,366
Less accumulated depreciation and amortization (249,592) (189,419)
------- -------
Total $342,070 $368,947
======= =======
4. INCOME TAXES
The components of the provision for income taxes are as follows:
Nine Months Year
Ended Ended
March 31, 1998 June 30, 1997
Current:
Federal $455,688 $(4,764)
State 105,988 7,092
------- -----
Total 561,675 2,328
Deferred:
Federal (13,645) 54,487
State 12,560 16,136
------ ------
Total (1,085) 70,623
----- ------
Provision for income taxes $560,590 $72,951
======== ======
The provision for income taxes is different from that which would be
obtained by applying the statutory Federal income tax rate (35%) to
income before provision for income taxes. The items causing this
difference are as follows:
Nine-Months Year
Ended Ended
March 31, 1998 June 30, 1997
Provision at statutory rate $512,527 $80,154
State income taxes, net of Federal benefit 77,056 15,330
Federal tax credits (21,883) (26,610)
Other (7,110) 4,077
----- -----
Provision at effective rate $560,590 $72,951
======= ======
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred tax
assets are as follows:
March 31, 1998 June 30, 1997
State taxes $46,626 $(3,477)
Reserves and accruals not currently deductible 20,310 10,154
Differences between book and tax basis of fixed
and intangible assets (33,960) (33,225)
Differences between book and tax basis inventory 12,930 41,008
Deferred tax credits 30,360
------ ------
Total $45,906 $ 44,820
====== ======
5. PREFERRED AND COMMON STOCK
Preferred stock is held by one shareholder and has a liquidation
preference of $347.50 per share. The Preferred shareholder is not
entitled to vote or receive dividends. Common shareholders are entitled
to receive dividends when and as declared by the Company's Board of
Directors. All outstanding shares of stock were acquired by Boatracs,
Inc. as of at July 7, 1998. (See Note 1).
6. PROFIT SHARING PLAN
The Company has a profit sharing plan for eligible employees. To be
eligible to join the Plan, an employee must be 21 years of age and must
have completed one year of service, as defined in the Plan. The Company
makes discretionary contributions as determined by the Company's Board
of Directors. Contributions accrued and paid for the nine-months ended
March 31, 1998 and for the year ended June 30, 1997 were $82,500 and $119,418,
respectively.
7. COMMITMENTS
The Company leases its principal facility under an operating lease.
Rent expense for the nine-months ended March 31, 1998 and for the year
ended June 30, 1997 was $45,864 and $64,786, respectively. Future
minimum lease payments for the facility lease are as follows for the
calendar year:
1998 $45,864
1999 35,672
------
Total minimum payments $81,536
======
Item 7
(b) Proforma Financial Information
The following unaudited pro forma condensed consolidated statements of
operations for the three months ended March 31, 1998 and for the twelve months
ended December 31, 1997 give effect as if the acquisition of Enerdyne
Technologies, Inc. (ET, Inc.) occurred as of January 1, 1998 and 1997,
respectively. The condensed consolidated balance sheet as of March 31,1998
gives effect to the acquisition as if such transaction occurred on
March 31, 1998.
The pro forma condensed consolidated financial statements have been
prepared by the management of the Company based on the historical financial
statements of the Company and of ET, Inc. and the acquisition of ET, Inc.
using the purchase method of accounting. Assumptions and adjustments are
discussed in the accompanying notes to the pro forma condensed consolidated
financial statements.
In the opinion of the management of the Company, all pro forma adjustments
necessary to state fairly such pro forma financial information have been
made. The unaudited pro forma condensed consolidated financial statements
are not necessarily indicative of what actual results of operations would have
been for the period had the transaction occurred on the dates indicated.
In addition, such financial statements do not purport to indicate the results
of future operations of financial position of the Company from the acquisition
date forward.
The accompanying pro forma financial statements reflect the allocation
of purchase price based on a preliminary analysis of the values of equity
instruments issued and the assets acquired and liabilities assumed. Final
analysis may result in a change to the purchase price allocation.
BOATRACS, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(IN 000'S) ADJUST-
BOATRACS ET, INC. MENTS TOTALS
REVENUES $2,003 $1,700 $3,703
COST OF REVENUES 1,202 395 1,597
----- --- -----
GROSS PROFIT 801 1,305 2,106
SELLING, GENERAL AND
ADMINISTRATIVE 703 756 ** 312 1,771
--- --- --- -----
INCOME (LOSS) FROM
OPERATIONS 98 549 (312) 335
OTHER INCOME (EXPENSE) 32 5 1)(213) (176)
-- - --- ---
INCOME (L0SS) BEFORE
PROVISION FOR INCOME
TAXES 130 554 (525) 159
TAX PROVISION (BENEFIT) 187 4)(113) 74
--- --- --- --
NET INCOME (LOSS) 130 367 (412) $85
BASIC EARNINGS (LOSS)
PER COMMON SHARE $.01 N/A $.00
DILUTED EARNINGS (LOSS)
PER COMMON SHARE $.01 N/A $.00
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 15,831 18,831
Dilutive effect of:
Employee stock options 854 854
Warrants 78 132
Weighted average of
common shares
outstanding, assuming
dilution 16,763 19,817
Notes to pro forma condensed consolidated financial statement of
operations for the three months ended March 31, 1998:
The following entries are made to adjust the condensed consolidated
statement of operations to give effect to the acquisition of ET, Inc.
as if it has occurred at the beginning of the quarter, January 1, 1998.
** The adjustment of $312 is the sum of entries 2), 3) and 5), which
have been combined for ease of presentation.
1) To record three months of interest expense at 8.5% on $10 million of
notes payable.
Dr. Interest Expense $213
Cr. Interest Payable $213
2) To record three months amortization expense of goodwill with a 16
year life.
Dr. Amortization expense $165
Cr. Accumulated amortization $165
3) To record three months amortization expense on a patent valued at
$18 million with a 16 year life.
Dr. Amortization expense $281
Cr. Accumulated amortization $281
4) To record the tax effect of the non-deductible patent amortization.
The remaining tax benefit is presumed subject to a valuation allowance.
Dr. Deferred taxes $113
Cr. Income tax benefit $113
5) To eliminate three months of Enerdyne executive salaries and bonuses
greater than the amount specified in the applicable employment agreements.
Dr. Cash $134
Cr. Salary expense $134
6) The weighted average number of shares has been recomputed to
include the shares issued in relation to the Enerdyne acquisition as if they
had been outstanding since January 1, 1998. The resulting weighted average
number of shares is 18,831,368.
<PAGE>
BOATRACS, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN 000'S)
ADJUST-
BOATRACS ET, INC. MENTS TOTAL
REVENUES $5,248 $6,296 5) $877 $12,421
COST OF REVENUES 3,035 1,759 5) 731 5,525
----- ----- --- -----
GROSS PROFIT 2,213 4,537 146 6,896
SELLING, GENERAL AND
ADMINISTRATIVE 2,505 3,335 **(878) 4,962
----- ----- --- -----
INCOME FROM OPERATIONS (292) 1,202 1,024 1,934
OTHER INCOME (EXPENSE) 37 23 1) (850) (790)
-- -- --- ---
INCOME (LOSS) BEFORE
PROVISION FOR TAXES (255) 1,225 174 1,144
--- ----- --- -----
TAX PROVISION (BENEFIT) 0 410 4) (450) (40)
- --- --- --
NET INCOME (255) 815 624 1,184
--- --- --- -----
BASIS EARNINGS (LOSS)
PER COMMON SHARE ($.02) n/a $.08
DILUTED EARNINGS n/a $.07
(LOSS) PER COMMON
SHARE
WEIGHTED AVERAGE
SHARES OUTSTANDING 13,535 16,535
Diluted effect of:
Employee stock options 142
Warrants 0
Weighted average of
common shares
outstanding,
assuming
dilution 16,677
Notes to pro forma condensed consolidated statement of operations for
the year ended December 31, 1997:
The following entries have been made to adjust the condensed
consolidated statement of operations for the year ended December 31, 1997
as if the acquisition of Enerdyne had taken effect as of January 1, 1997.
** The entry of $878 is the sum of entries 2), 3), 5) and 6) which have
been combined for ease of presentation.
1) To record interest expense on notes payable at 8.5% on $10 million
of notes payable.
Dr. Interest expense $850
Cr. Interest payable $850
2) To record amortization expense of goodwill with a 16 year life.
Dr. Amortization expense $660
Cr. Accumulated amortization $660
3) To record amortization expense on a patent valued at $18 million
with a 16 year life.
Dr. Amortization expense $1,125
Cr. Accumulated amortization $1,125
4) To record the tax effect of the non-deductible patent amortization.
The remaining tax benefit is presumed subject to a valuation allowance.
Dr. Deferred taxes $450
Cr. Income tax benefit $450
5) To record ten months operations of MED Associates, Inc. acquired
November 1, 1997.
Dr Cost of Sales $731
Dr Selling, general and administrative 67
Cr Revenues $877
Cr Retained earnings $79
6) To eliminate Enerdyne executive salaries and bonuses greater than
the amount specified in the applicable employment agreements.
Dr. Cash $2,730
Cr Salary expense $2,730
7) The weighted average number of shares has been recomputed to
include the shares issued in relation to the Enerdyne acquisition as if they
had been outstanding since January 1, 1997. The resulting weighted average
number of shares is 16,535,077.
BOATRACS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(IN 000'S)
ADJUST-
BOATRACS ET, INC. MENTS TOTAL
ASSETS
- ------
Cash $257 1,131 1)(1,131) $193
2)(2,000)
3) 1,436
4) 500
Other current assets 2,362 1,676 1)(1,676) 4,244
4) (500)
2) 2,382
Total current assets 2,619 2,807 4,437
Property - net 252 342 1) (342) 252
Patent 2)18,000 18,000
Goodwill 810 2)10,553 11,363
Other assets 327 6 1) (6) 327
--- - - ---
Total assets $4,008 $3,155 $34,379
----- ----- ------
LIABILITIES AND STOCK-
HOLDERS EQUITY
Accounts payable $1,386 $157 1) (157) $1,386
Other current
liabilities 515 1,157 1)(1,157) 1,690
--- ----- ----- -----
2) 1,175
Total current
liabilities 1,901 1,314 3,076
Deferred income taxes 2) 7,200 7,200
Notes payable 2)10,000 10,000
Deferred income tax 34 1) (34)
Common stock, no
par value 6,989 20 1) (20)
2)10,560
3) (44) 17,505
Note receivable for
common stock (1,568) 3) 1,480 (88)
Accumulated earnings
(deficit) (3,314) 1,787 1)(1,787) (3,314)
----- ----- ----- -----
Total liabilities
and stock-holders
equity $4,008 $3,155 $34,379
----- ----- ------
Notes to pro forma condensed consolidated balance sheet:
1) To eliminate ET, Inc. balance sheet as of 3/31/98 due to acquisition.
Dr. Accounts payable 157
Other current liabilities 1,157
Deferred income tax 34
Common Stock 20
Accumulated earnings 1,787
Cr. Cash 1,131
Other current assets 1,676
Property -net 342
Other assets 6
2) To record purchase of ET, Inc.
Dr Patent 18,000
Goodwill 10,553
Assets of ET,. Inc. at
fair value 2,382
Cr. Deferred tax balance 7,200
Liabilities of ET,. Inc.
at fair value 1,175
Notes payable 10,000
Common stock 10,560
Cash 2,000
3) Entry to record payment on a note receivable from an officer and
major shareholder of the Company which was repaid at a discount prior
to the acquisition. This transaction was necessary to finalize
the acquisition.
Dr. Cash 1,436
Common Stock (discount given) 44
Cr. Note Receivable 1,480
4) To reclassify a deposit placed in escrow on the acquisition.
Dr. Cash 500
Cr. Current assets 500
(c) Exhibits
2.2 First Amendment to Agreement and Plan of Reorganization by and among
Boatracs, Inc., a California corporation, Boatracs Acquisiton, Inc.,
a California corporation, Enerdyne Technologies, Inc., a California
corporation, Scott T. Boden, Irene Shinsato, Jon Gilbert and Michael
Silverman.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: November 16, 1998 BOATRACS, INC.
BY: /S/ MICHAEL SILVERMAN,
CHAIRMAN OF THE BOARD
EXHIBIT 23.1
CONSENT OF DELOITTE AND TOUCHE LLP, INDEPENDENT AUDITORS
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 333-53141 of Boatracs, Inc. on Form S-8 of our report dated
July 31, 1998 on the financial statements of Enerdyne Technologies, Inc.,
appearing in this Amendment No. 2 to Current Report on Form 8-K/A of Boatracs,
Inc. filed on or about November 18, 1998.
/s/ DELOITTE AND TOUCHE LLP
San Diego, California
November 18, 1998
EXHIBIT 2.2
FIRST AMENDMENT TO AGREEMENT AND
PLAN OF REORGANIZATION
This First Amendment to Agreement and Plan of Reorganization ("Amendment")
is entered into as of July 7, 1998, by and among Boatracs, Inc., a California
corporation ("Boatracs"), Boatracs Acquisition, Inc., a California
corporation ("Merger Sub"), Enerdyne Technologies, Inc., a California
corporation ("Enerdyne"), Scott T. Boden ("Boden"), Irene Shinsato
("Shinsato"), Jon Gilbert ("Gilbert") and Michael Silverman
("Silverman"). The capitalized terms used in this Amendment shall have the
meanings ascribed such terms in the Agreement and Plan of Reorganization
entered into among the parties hereto as of July 7, 1998 (the "Agreement").
1. Recitals.
1.1. As of July 7, 1998 the parties to this Amendment entered
into the Agreement and certain ancillary agreements and instruments including
certain Senior Promissory Notes made by Boatracs in favor of Boden and
Shinsato and Personal Guaranties made by Gilbert and Silverman in favor of
Boden and Shinsato.
1.2. Boatracs is attempting to obtain a loan from a lender (the
"Lender") to prepay an amount not yet due under the Senior Promissory Notes.
1.3. The parties to the Agreement wish to amend the Agreement and
certain of the ancillary agreements and instruments attached thereto and the
related Personal Guaranties of Gilbert and Silverman if Boatracs makes a
prepayment under the Senior Promissory Notes.
1.4. By executing this Amendment the parties intend to amend the
Agreement and such other agreements and instruments with effect from July 7,
1998 on the terms set forth in this Amendment.
2. Amendment. The Agreement is amended by adding Section 1.12 to
provide as follows:
1.12. Prepayment Under the Senior Promissory Notes. If the Senior
Promissory Notes payable to Boden and Shinsato, copies of which are attached
to the Amendment as Exhibits A and B, respectively, are prepaid (the
"Prepayment") on or before January 15, 1999, prorata to their respective
aggregate balances, in an amount equal to not less than 50% of the outstanding
principal amount, then concurrently with the Prepayment:
(a) The Nonstatutory Stock Option Agreement between Boatracs and
Boden, attached to this Amendment as Exhibit C, shall be deemed amended in the
following respects:
(i) At Boatracs' option, Section 1.1(f) shall be deleted
and substituted with: (f) "Exercise Price" means the average selling price
per share of Boatracs' common stock as quoted on the NASDAQ Bulletin Board for
the 30-day period immediately preceding a prepayment.
(ii) Section 1.1(i) shall be deleted and substituted with
the following:
(i) "Number of Option Shares" means "X" shares of Stock, as adjusted from
time to time pursuant to Section 9, where "X" shall be determined on the
date of the Prepayment to be equal to the greater of (a) 500,000 or (b)
250,000 multiplied by the "Exercise Price" computed in accordance with
Section 1.1(f), as amended hereby.
(b) The Nonstatutory Stock Option Agreement between Boatracs and
Shinsato, attached as Exhibit C to this Amendment, be deemed amended in the
following respects:
(i) At Boatracs' option, Section 1.1(f) shall be deleted
and substituted with: (f) "Exercise Price" means the average selling price
per share of Boatracs' common stock as quoted on the NASDAQ Bulletin Board for
the 30-day period immediately preceding a prepayment.
(ii) Section 1.1(i) shall be deleted and substituted
with the following:
(i) "Number of Option Shares" means "X" shares of Stock, as adjusted from
time to time pursuant to Section 9, where "X" shall be determined on the date
of the Prepayment to be equal to the greater of (a) 500,000 or (b) 250,000
multiplied by the "Exercise Price" computed in accordance with Section 1.1(f),
as amended hereby.
(c) Boden and Shinsato shall execute a subordination agreement in
favor of the Lender under the terms wereof they shall subordinate their
respective Senior Promissory Notes to the Lender's loan in an amount not
exceeding $5,000,000 on such terms and conditions as may be satisfactory to
Boden and Shinsato, in their sole discretion.
(d) The Personal Guaranty by Gilbert in favor of Boden and Shinsato
attached to this Amendment as Exhibit E, shall be deemed amended such that the
maximum amount of the Guaranty will be increased from one-third (1/3) of the
outstanding Debt to one-half (1/2) of the outstanding Debt (as defined in the
Guaranty).
(e) The Personal Guaranty by Silverman in favor of Boden and Shinsato
attached to this Amendment as Exhibit F, shall be deemed amended such that the
maximum amount of the Guaranty will be increased from one-third (1/3) of the
outstanding Debt to one-half (1/2) of the outstanding Debt (as defined in the
Guaranty).
(f) Boden and Shinsato shall deliver the originally executed
iterations of Exhibits A, B, C and D to the Company in an exchange for newly
executed documents identical to Exhibits A, B, C, and D except as amended in
accordance with this Amendment, Gilbert and Silverman shall deliver the
originally executed iterations of their respective Personal Guaranties to
Shinsato and Boden in an exchange for newly executed documents identical to
such existing Guaranties except as amended in accordance with this Amendment.
(g) Nothing contained in this Section 1.12 shall be construed as
obligating Boatracs to make the Prepayment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
Boatracs, Inc. Enerdyne Technologies, Inc.
a California corporation a California Corporation
By: /S/ MICHAEL L. SILVERMAN By: /S/ IRENE SHINSATO
Name: MICHAEL L. SILVERMAN Name IRENE SHINSATO
Its: CHAIRMAN Its: PRESIDENT
By: /S/ CURT MCLELAND
Curt McLeland
Secretary
Boatracs Acquisition, Inc.
a California corporation
Irene Shinsato
By: /S/ MICHAEL L. SILVERMAN /S/ IRENE SHINSATO
Name: MICHAEL L. SILVERMAN Scott T. Boden
Its: ASSISTANT SECRETARY /S/ SCOTT BODEN
By: /S/ CURT MCLELAND
Curt McLeland
Secretary
Michael Silverman Jon Gilbert
/S/ MICHAEL SILVERMAN /S/ JON GILBERT
EXECUTED: NOVEMBER 11, 1998
