SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-3207
Barringer Technologies Inc.
(Exact name of registrant as specified in its charter)
Delaware 84-0720473
(State or Other Jurisdiction of (IRS Employer
Identification Incorporation or Organization) Number)
219 South Street, New Providence, New Jersey 07974
(Address of principal executive offices)
(Zip Code)
(908) 665-8200
____________________________________________________________
(Registrant's telephone number, including area code)
____________________________________________________________
(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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
Common stock, $0.01 par value - outstanding as of November 8, 1995 -
3,411,572 shares
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
INDEX
PART I -- Financial Information
Item 1. Financial Statements.
Consolidated Balance Sheets as of September 30,
1995 (unaudited) and December 31, 1994;
Consolidated Statements of Operations for the
nine months and three months ended September 30,
1995 and 1994 (unaudited);
Consolidated Statement of Shareholders' Equity
for the nine months ended September 30, 1995 (unaudited);
Consolidated Statements of Cash Flows for the
nine months and three months ended September 30,
1995 and 1994 (unaudited);
Notes to Consolidated Financial Statements (unaudited);
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Part I - - Financial Information
Item 1. Financial Statements
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS Sept 30, 1995 Dec 31, 1994
(UNAUDITED)
Current Cash and equivalents $ 151 $ 267
assets:
Receivables, less 2,355 2,565
allowance of $445 and $539
Inventories 1,419 1,790
Net assets held for sale (note 4) 993 -
Prepaid expenses and other 294 220
Deferred tax asset (note 2) 225 225
_______________________
TOTAL CURRENT ASSETS 5,437 5,067
Property and 651 1,364
equipment, net
Other assets 101 361
______________________
TOTAL ASSETS $6,189 $ 6,792
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
LIABILITIES AND Sept 30, Dec 31,
SHAREHOLDERS' 1995 1994
EQUITY (unaudited)
<S> <C> <C> <C>
Current liabilities: Bank indebtedness and other notes $1,053 $ 1,160
Accounts payable 1,217 1,632
Accrued liabilities 1,389 1,393
Liabilities to operation held 485 -
for sale
Current portion of long-term debt 300 230
___________________
TOTAL CURRENT LIABILITIES 4,444 4,415
Long term debt,
net of current portion - 451
TOTAL LIABILITIES 4,444 4,866
Minority interest - 740
Shareholders' Convertible preferred stock, - 555
equity (notes 9 $1.25 par value, 1,000 shares
and 10): authorized, 0 and 444 shares
outstanding, respectively
Class A convertible preferred 101 101
stock, $2.00 par value, 1,000
shares authorized, 82 shares
outstanding, less discount of
$64
Class B convertible preferred 635 635
stock, $2.00 par value, 730
shares authorized, 318 shares
outstanding
Common stock, $.01 par value, 34 29
7,000 and 5,000 shares
authorized, 3,412 and 2,872
shares outstanding,
respectively
Additional paid-in capital 17,542 16,036
Accumulated deficit (16,148) (15,633)
Cumulative foreign currency (406) (524)
translation adjustment 1,758 1,199
Less: common stock in treasury at cost, 31 shares (13) (13)
_______ ______
TOTAL SHAREHOLDERS' EQUITY 1,745 1,186
_____ ______
TOTAL LIABILITIES AND EQUITY $ 6,189 $ 6,792
======= ======
</TABLE>
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS EXCEPT PER SHARE DATA
(UNAUDITED)
<TABLE>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues from operations $ 1,434 $ 1,593 $4,544 $5,299
Cost of sales 952 823 2,844 2,958
_________________________________________
Gross profit 482 770 1,700 2,341
_________________________________________
Operating expenses:
Selling, general 656 742 1,956 2,139
and administrative
Unfunded research and development 29 4 133 178
_________________________________________
685 746 2,089 2,317
_________________________________________
Operating income (loss) (203) 24 (389) 24
__________________________________________
Other income (expense):
Interest (64) (49) (186) (144)
Other, net (35) (45) (83) 61
__________________________________________
(99) (94) (269) (83)
___________________________________________
Loss from continuing
operations (302) (70) (658) (59)
Income from operation
held for sale 139 20 194 1
___________________________________________
Net loss for the period (163) (50) (464) (58)
Preferred stock dividend requirements (16) (24) (67) (81)
__________________________________________
Net loss attributable to
to common shareholders $ (179) $ (74) $ (531) $ (139)
==============================================
Per share data (notes 3 and 9):
(Loss) continuing operations $ (0.09) $(0.03) $(0.23) $ (0.05)
Income operation held for sale 0.04 - 0.06 -
______________________________________________
Net loss per share $ (0.05) $(0.03) $(0.17) $ (0.05)
Weighted average shares outstanding 3,412 2,853 3,209 2,818
============================================
</TABLE>
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS) (UNAUDITED)
<TABLE>
Class A Class B Foreign
Conv. Conv. Conv. Currency
Common Paid-in Pref. Pref. Pref. Transl.
Stock Capital Stock Stock Stock Deficit Adjust
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Dec. 31, 1994 $ 29 $ 16,036 $555 $101 $635 $(15,633) $ (524)
Sale of securities net 4 901
of expenses
Conversion of preferred stock 1 554 (555)
1995 dividend on preferred 51 (51)
shares
Current period adjustment 118
Net loss (464)
_________________________________________________________________________
Balance - September 30, 1995 $ 34 $ 17,542 $ 0 $101 $635 $(16,148) $ (406)
==================================================================
</TABLE>
__________________________
*Net of receivable from sale of stock of $274.
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS ) (UNAUDITED)
<TABLE>
Three months ended Nine months ended
September 30, September 30, September 30,
1995 1994 1995 1994
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $(163) $ (50) $(464) $(58)
Items not affecting cash:
Depreciation/amortization 81 228 390 625
Minority interest - (24) - (2)
(Income) from operation held for (139) (194)
Other 24 225 105 (98)
Decrease (increase)in non-cash
working capital balances related to:
Continuing operations 399 (67) (264) (1,066)
Operation held for sale - - 352 -
_____________________________________________
Cash provided by (used
in) operating activities 202 312 (75) (599)
______________________________________________
INVESTING ACTIVITIES
Purchase of equipment and other (128) (482) (390) (639)
Release of cash held in escrow - - - 225
(Increase) decrease in investment in
operation held - for sale 55 - (78) -
Operation held for sale - - 10 -
_____________________________________________
Cash (used in) investing
activities (73) (482) (458) (414)
_____________________________________________
FINANCING ACTIVITIES
Reduction in long-term debt - (65) (64) (159)
Increase (reduction) in bank debt and
other (304) 48 (30) 543
Proceeds on issuance of securities and
other - - 905 243
Operation held for sale - - (394) -
____________________________________________
Cash provided by (used
in) financing activities (304) (17) 417 627
activities
____________________________________________
(Decrease) in cash and cash equivalents (175) (187) (116) (386)
Cash at beginning of period 326 287 267 486
____________________________________________
Cash at end of period $ 151 $ 100 $ 151 $ 100
============================================
</TABLE>
See notes of consolidated financial statements
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
(Continued)
<TABLE>
Three Months ended Nine Months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CHANGES IN COMPONENTS OF
NON-CASH WORKING CAPITAL
BALANCES RELATED TO
CONTINUING OPERATIONS
$83 $(119) $(674) $206
Receivables
Inventory 90 187 371 (950)
Other current assets (114) (73) (122) (110)
Accounts payable and accrued
expenses 340 (62) 161 (212)
______________________________________________
(Decrease) increase in non-
cash working capital balances $399 $(67) $(264) $(1,066)
============================================
Cash paid during the period of interest $ 53 $ 70 $ 203 $ 162
=============================================
Cash paid during the period for income - $ 7 - $ 14
taxes
=============================================
</TABLE>
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the consolidated financial
position of the Company as of September 30, 1995 and the results of its
operations and its cash flows for the three months and nine months ended
September 30, 1995 and 1994, respectively. The accounting policies
followed by the Company are set forth in the Notes to Consolidated
Financial Statements in the audited consolidated financial statements of
Barringer Technologies Inc. and Subsidiaries included in its Form 10-K
for the year ended December 31, 1994. This report should be read in
conjunction therewith. The results of operations for the interim
periods are not necessarily indicative of the results to be expected for
the full year.
2. As a result of the Company's history of losses, a valuation
allowance has been provided for all U.S. deferred tax assets and for
substantially all of the Canadian deferred tax assets. The net deferred
tax asset relates to the Company's Canadian subsidiary, which has
available tax credits and loss carryforwards. The Canadian subsidiary
has a history of profitability, despite the consolidated losses of the
Company. Based on this history and estimated 1995 earnings, which
includes earnings from certain contracts, as well as available tax
planning strategies, management considers realization of the unreserved
deferred tax asset more likely than not.
3. Per share data is based on the weighted average number of common
shares outstanding. See note 9, below, for information concerning a one-
for-four reverse stock split.
4. The Company maintains voting control of more than 50% of the common
stock of Barringer Laboratories Inc. ("Labco") through an irrevocable
agreement with another Labco shareholder, which requires such
shareholder, for as long as it is a shareholder of Labco, to vote its
83,000 shares of Labco common stock in the manner designated by the
Company. The agreement also gives the Company the right to bid on such
shares of Labco should the record holder wish to sell them.
The Company is actively seeking a purchaser for its 47% interest in
Labco. Accordingly, the financial statements reflect Labco as an asset
held for sale. Management believes it will ultimately dispose of Labco
at a gain. Labco is currently operating profitably and management
anticipates that Labco will continue to do so for the remainder of 1995.
However, management will reevaluate this estimate quarterly.
Where appropriate, the Company's Consolidated Statement of
Operations and Statement of Cash Flows have been reclassified to reflect
Labco as an operation held for sale.
The following are the condensed results of operations and condensed
balance sheet for Labco.
Condensed Results of Operations
(In Thousands)
<TABLE>
Three months Nine Months
ended ended
September 30, September 30,
1995 1994 1995 1994
________________________________________
<S> <C> <C> <C> <C>
Revenues $1,867 $1,560 $4,956 $ 4,390
Costs and expenses:
Cost of sales 1,216 1,159 3,438 3,430
Expenses 356 357 1,105 958
_______________________________________
1,572 1,516 4,543 4,388
Operating Income 295 44 413 2
Minority interest 156 24 219 1
_________________________________________
Net Income $ 139 $ 20 $ 194 $ 1
=========================================
</TABLE>
Condensed Balance Sheet
As of September 30, 1995
(In Thousands)
Current assets $ 1,290
Property and equipment, net 644
Other assets 517
_____
Total assets $ 2,451
=====
Current liabilities 663
Long term debt 65
Equity 1,723
_____
Total liabilities and equity $ 2,451
=====
5. On May 9, 1995, the Company completed the private placement of
its securities to two institutional investors. The private
placement consisted of 125 units priced at $6,000 each for an
aggregate sales price of $750,000. Each unit ("Units") consists
of 2,500 shares of the Company's common stock and a five year
warrant to purchase 2,500 shares of the Company's common
stock at $2.00 per share. In addition, in order to induce
the institutional investors to enter into this transaction, an
additional three year warrant to acquire 37,500 shares of the
Company's common stock at $2.00 per share was issued. The
Company has allocated a portion of the proceeds for working
capital purposes and has used a portion of the proceeds to repay
indebtedness owed by its wholly owned subsidiary, Barringer
Research Limited, ("BRL") to its bank, Toronto-Dominion Bank
(the "Bank").
On June 30, 1995, the Company completed an additional private
placement in which it sold an additional 28 Units, including 22 Units to
7 members of senior management and the Company's Board of Directors, for
proceeds aggregating $168,000. This private placement did not include
the additional three year warrant.
6. On September 28, 1995, the Company entered into an agreement (the
"Agreement") with the Bank, pursuant to which the Bank agreed that
the Company's Canadian subsidiary may have until September 30, 1995
to come into compliance with certain amended covenants specified in the
Agreement. In exchange, the Company agreed to utilize a portion of
the net proceeds it may receive upon the sale of its investment in
Labco to increase the capital of BRL, the Company's Canadian
subsidiary. In addition, the Company agreed to provide the
Bank with additional collateral to secure its advances to BRL. As of
September 30, 1995, BRL was in compliance with such covenants. However,
there is no assurance that the Company will continue to remain in
compliance with such covenants during the fourth quarter or thereafter,
nor as to the action, if any, the Bank would take upon such non-
compliance.
7. Effective June 30, 1995, the Company, pursuant to the terms of its
Certificate of Incorporation, as amended, converted all of the
outstanding shares of the Company's convertible preferred stock, par
value $1.25 per share, into shares of the Company's common stock, par
value $0.01 per share, at a conversion ratio of 0.3217 shares of common
stock for each outstanding share of convertible preferred stock. As a
result, effective June 30, 1995, the Company issued 122,599 shares of
common stock in exchange for 381,099 shares of the convertible preferred
stock.
8. During the three months and nine months ended September 30, 1995, the
Company was successful in renegotiating amounts due to certain vendors.
Accordingly, the Company was able to reduce its liability to such
entities by approximately $73,000 and $231,000, respectively.
9. At the Company's annual meeting, held on August 30, 1995, the
shareholders approved a one-for-four reverse stock split (the "Reverse
Split") of the Company's Common Stock, par value $0.01 per share,
effective as of 11:58 p.m. on September 22, 1995. Accordingly, all
share and per share data have been retroactively restated to reflect
the Reverse Split.
10. At the Company's reconvened annual meeting, held on September 14,
1995, the shareholders approved a proposed amendment to the Company's
Certificate of Incorporation to increase the authorized shares of
capital stock of the Company. Accordingly, the Company's authorized
shares of Common Stock were increased from 5 million to 7 million shares
(after giving effect to the Reverse Split discussed in note 9) and the
Company's authorized shares of Preferred Stock were increased from 1
million shares to 4 million shares, effective as of 11:58 p.m. on
September 22, 1995.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
BARRINGER TECHNOLOGIES INC.
AND SUBSIDIARIES
Management's Discussion and Analysis of Results of Operations and
Financial Condition
In order to devote its full resources to its instrument business,
primarily the further development, marketing and production of its new
Model 400 IONSCAN[R] and the Company's newly introduced consumer product
the Barringer DrugAlert[TM] System, the Company has determined to sell its
47% ownership in Labco. The Company is required to use a portion of the
proceeds of a sale of Labco to repay indebtedness to Labco and to
increase the capital of BRL. Labco is an analytical services company,
principally engaged in environmental monitoring, geochemical analysis
and image processing for the hydrocarbon, and mineral exploration
industries. Since such a sale would represent the disposal of a
separate and distinct business segment, the Company's financial
statements, where appropriate, have been reclassified to reflect Labco
as an operation held for sale. The remaining business segment develops,
manufactures and markets specialty analytical instruments for security,
law enforcement, exploration and environmental monitoring applications.
Accordingly, management's discussion and analysis of financial condition
and results of operations is presented on that basis.
CONTINUING OPERATIONS
Quarter ended September 30, 1995 compared to Quarter ended September 30, 1994
Instrument sales for the quarter ended September 30, 1995 decreased by
$174,000, or 11.5%, compared to the same period last year. The decrease
was the result of relatively flat unit sales at lower average selling
prices for the Company's new Model 400 IONSCAN[R] which is less expensive
than its predecessor. The Company relies upon sales to governmental
agencies, which are subject to mandated procurement processes and
budgetary constraints. As a result, the selling cycle for its products
often extends over long periods, which can result in significant
variations in quarterly sales.
Sales of the research and development and other business for the quarter
ended September 30, 1995 increased by $15,000, or 18.8%, compared to the
same quarter last year. The improvement was the result of continued work
on a Cdn. $1,967,000 contract awarded to the Company in late 1994. The
contract was for the design and construction of an airborne laser-
fluorosensor system to precisely monitor the proliferation of oil spills
in order to enhance environmental clean-up efforts. It is anticipated
that the first unit will be completed in 1997.
The overall gross profit and the gross profit as a percentage of sales,
for the Company, for the quarter ended September 30, 1995 decreased from
$770,000 (48.3%) to $482,000 (33.6%) compared to the same quarter last
year. The gross profit and the gross profit percentage on research and
development and other business for the quarter ended September 30, 1995
decreased from $6,000 (7.5%) to a negative $170,000 (179%) compared to
the same quarter last year. The negative gross profit in the research
and development segment was caused by the reduced billings for the
quarter not being sufficient to absorb the segments fixed overhead. As
work accelerates on these contracts, the Company expects this trend will
reverse. The gross profit and the gross profit percentage on instrument
sales for the quarter ended September 30, 1995 decreased from $764,000
(50.5%) to $652,000 (48.7%) compared to the same quarter last year. The
slight decrease in the gross profit in the instrument's segment was due
primarily to product mix.
Selling, general and administrative expenses for the quarter ended
September 30, 1995 decreased by $86,000, or 11.6%, over the comparable
period last year. Selling and marketing expenses increased by $64,000,
or 14.7%, due to the full impact of the French and United Kingdom
offices which were just getting under way during the third quarter of
1994 and the costs associated with the Barringer DrugAlert[TM] sales and
marketing program. General and administrative expenses decreased by
$150,000, or 49.0%, due primarily to reductions aggregating $63,000
negotiated in amounts owed to suppliers of services. and $120,000 of
additional income recognized on the termination of the Company's
Canadian Pension Plan as of December 31, 1993.
Unfunded research and development expense, primarily applied to the
Company's IONSCAN[R] technology, increased by $25,000 or 625.0%. As
manpower is required for funded projects, unfunded research and
development costs can fluctuate quarter to quarter. Interest expense
increased by $15,000, or 30.6%, due to higher levels of borrowings and
increased interest rates.
Other expense, net of income, in the quarter ended September 30, 1995
decreased by $10,000 or 22.2% over the same period in the prior year.
The decrease occurred in various miscellaneous categories. Loss from
continuing operations was $302,000 for the quarter ended September
30, 1995 as compared to a loss of $70,000 for the comparable quarter
last year. The increase in the loss was primarily due to
reduced margins on reduced sales primarily in the research and
development segment.
Income from operations held for sale for the quarter ended September 30,
1995 of $139,000 is an increase of $119,000 compared to the same quarter
last year. The improvement was due to the increased volume of sales and
improved margins.
Nine Months Ended September 30, 1995 Compared to Nine Months Ended
September 30, 1994
This analysis should be read in conjunction with the analysis of the
third quarter appearing above which contains additional information.
Instrument sales for the nine months ended September 30, 1995 decreased
by $1,369,000, or 26.8%, over the same period last year. During this
period last year, the Company was completing work on its Eurotunnel
contract, which contributed greatly to sales. The Company substantially
completed the Eurotunnel contract in April 1994.
Sales of the research and development business for the nine months ended
September 30, 1995 increased by $614,000, or 315%, compared to the same
period last year. The increase was the result of commencing work on a
Cdn. $1,967,000 contract that was awarded to the Company in late 1994.
The contract was for the design and construction of an airborne laser-
fluorosensor system to precisely monitor the proliferation of oil spills
in order to enhance environmental clean-up efforts. It is anticipated
that the first unit will be completed in 1997.
The overall gross profit and the gross profit as a percentage of sales,
for the Company, for the nine months ended September 30, 1995 decreased
from $2,341,000 (44.2%) to $1,700,000 (37.4%) compared to the same
period last year. The gross profit and the gross profit percentage on
research and development and other business for the nine months ended
September 30, 1995 decreased from a negative $74,000 (37.9%) to a
negative $136,000 (16.8%) compared to the same period last year. The
negative gross profit in the research and development segment was caused
by the reduced billings for the third quarter not being sufficient to
absorb the segments fixed overhead. As work accelerates on these
contracts, the Company expects this trend will reverse. The gross
profit for the nine months ended September 30, 1995 decreased from
$2,415,000 to $1,836,000 compared to the same period last year while
the gross profit as a percentage of sales increased from 47.3% to
49.2%. The slight increase in the gross profit percentage in the
instrument's segment was due primarily to maintaining higher sales
prices on the discontinued Model 350 IONSCAN[R] which inventory costs were
partially written down in 1994.
Selling, general and administrative expenses for the nine months ended
September 30, 1995 decreased by $183,000, or 8.6%, over the comparable
period last year. Selling and marketing expenses increased by $195,000,
or 18.5%, due to the full impact of the French and United Kingdom
offices which were just getting under way this time last year and the
costs associated with the Barringer DrugAlert[TM] sales and marketing
program. General and administrative expenses decreased by $378,000, or
34.8%, due primarily to reductions aggregating $227,000 negotiated in
amounts owed to suppliers of services and $120,000 of additional income
recognized on the termination of the Company's Canadian Pension Plan as
of December 31, 1993. The Company continues to closely monitor its
expenses.
Unfunded research and development, primarily applied to IONSCAN[R]
technology, decreased by $45,000, or 25.3%, from the comparable period
in 1994. As resources are required for funded projects, unfunded
research and development can fluctuate period to period.
Interest expense increased by $42,000, or 29.2%, due to higher levels of
borrowings and increased interest rates.
Other expense, net of income, for the nine months ended September 30,
1995 was $83,000 as compared to other income, net of expense, of $61,000
for the same period last year. The major reason for the $144,000
unfavorable variance was due to a foreign exchange gain of $77,000 for
the nine months ended September 30, 1994 against a foreign exchange loss
of $89,000, primarily related to Canadian currency, for the comparable
period this year.
Loss from continuing operations was $658,000 for the nine months ended
September 30, 1995 as compared to a loss of $59,000 for the comparable
period last year. The increase in the loss was due to reduced sales,
lower margins coupled with the large swing from foreign exchange gains
to losses relating primarily to Canadian currency.
Income from operations held for sale for the nine months ended September
30, 1995 of $194,000 as compared to income from operations held for sale
of $1,000 for the comparable period last year. The improvement was due
to the increased volume of sales and improved margins.
Capital Resources and Liquidity
Operating Activities
The Company's reduced level of sales during the year ended December 31,
1994 and the first three quarters of 1995 and the resultant losses of
$2,565,000 and $464,000, respectively, resulted in a severe cash
shortage during the last half of 1994 and during all of 1995. The
Company continues to restructure its payments to suppliers to conserve
cash. The cash shortages have created dislocations in the production
process and have caused production inefficiencies. The Company
manufactures to a sales forecast one quarter in advance. To the extent
that orders outpace the forecast, the Company may not be able to fill
all its orders in a particular quarter. Orders not filled in one
quarter will be backordered and filled in the following quarter.
The Company believes that this problem will resolve itself through
the sale of its investment in Labco and sales of its remaining
Model 350 IONSCANS[R]. However, there can be no assurance that this
problem will be resolved or that it will not get worse.
On March 28, 1995, the Company introduced Barringer DrugAlert System, a
new consumer product, an in-home drug detection and identification
system available to consumers, that will allow them to determine the
presence of illicit drugs from the sampled areas. The Company has
entered into a number of distribution agreements in the United States
and overseas to market the product on behalf of the Company. The
Company is in the process of evaluating a number of marketing
techniques in order to determine the most effective means to maximize
sales of this product in the United States. In connection therewith, the
Company conducted a market test using a 60 second commercial which was aired
on cable television networks in two selected geographical areas of the
United States for a three week period. The results indicated that there
are barriers to selling that must be better addressed in order to
achieve success through this marketing technique. The Company is evaluating
methodology in this regard. At the same time, the Company is also in the
process of formulating a sales strategy to sell the product at retail
pharmacies. A retail market test is now being planned and is expected
to commence by the end of the fourth quarter. The Company does not
anticipate significant sales of this product in 1995 and there can be
no assurance that markets for this product will, in fact, develop or as
to the timing thereof.
Financing Activities
The Company has issued an interest bearing note to Labco in the amount
of $452,000, which is currently due December 31, 1995 (the "Labco
Note"). At December 31, 1994, the Company was in arrears on its
interest payments pursuant to the Labco Note in the approximate amount
of $18,000. In early 1995, Labco agreed to extend the due date on the
Labco Note from May 31, 1995 to December 31, 1995, in exchange for
which, on April 7, 1995, the Company issued to Labco a warrant which
currently represents the right to purchase 6,250 shares of Common Stock
at $4.00 per share, which warrant expires on April 6, 1997. At that
time, the Company agreed that it would, on June 30, 1995, pay to Labco
the accrued interest, including past due amounts on the Labco Note,
which amounts have been paid in full. The Company intends to repay the
principal of the Labco Note on or before the amended due date from the
sale of its 47% interest in Labco and/or the proceeds from sales of the
Company's securities. If the Company is unable to pay to Labco the
principal amount of the Labco Note when due, the Company presently
intends to negotiate an extension of time during which to pay such
principal. If the Company is unable to repay such principal when due
and is unsuccessful in obtaining an extension of time during which to
pay the principal, the Company could lose its investment in Labco.
Presently, the Company has pledged its stock of Labco to Labco and Labco
is contractually entitled to such stock upon the Company's default on
the Labco note. The Company continues to negotiate with several
potential purchasers, including Labco, for its shares of Labco's common
stock. However, there can be no assurance that the Company will be able
to conclude any of those transactions or as to the timing thereof.
Pursuant to the terms of the line of credit arrangement Labco entered
into with a commercial lender, Labco is prohibited from transferring
funds to the Company in the form of dividends, loans or advances or
repayments.
As a result of prior non-compliance under BRL's line of credit with
the Toronto-Dominion Bank (the "Bank") BRL'S borrowing under the line of
credit exceeded the amount available thereunder. The Company has sought
an extension of time from the Bank in which to come into compliance with
the applicable borrowing. On September 28, 1995, the Company entered into
an agreement with the Bank pursuant to which the Bank agreed that the
Company's Canadian subsidiary may have until September 30, 1995 to come
into compliance with certain amended covenants specified in the Agreement.
In exchange, the Company has agreed to dispose of its interest in
Labco and to increase the capital of BRL by an amount equal to the net
proceeds of such sale. In addition, the Company agreed to provide the
Bank with additional collateral to secure its advances to the Canadian
subsidiary. At September 30, 1995, the Company was in compliance with
such covenants specified in the agreement. However, there is no
assurance that the Company will continue to remain in compliance with
such covenants during the fourth quarter or thereafter, nor as to the
action, if any, the Bank would take upon such non-compliance.
On May 9, 1995, the Company completed a private placement of its
securities to two institutional investors. The private placement
consisted of 125 units priced at $6,000 each for an aggregate sales
price of $750,000. Each unit (a "Unit") consists of 2,500 shares of the
Company's common stock and a five year warrant to purchase 2,500 shares
of the Company's common stock at $2.00 per share. In addition, in order
to induce the institutional investors to enter into this transaction, an
additional three year warrant to acquire 37,500 shares of the Company's
common stock at $2.00 per share was issued. In another private
placement on June 30, 1995, the Company sold an additional 22 Units to
seven of its Officers and Directors for aggregate proceeds of $132,000
and sold an additional six Units to two other private investors for
aggregate proceeds of $36,000. The additional Units did not contain the
additional three year warrant contained in the May 9, 1995 private
placement. The Company has allocated a portion of the proceeds for
working capital purposes, principally for manufacturing the Company's
new Model 400 IONSCAN[R] and related sales and promotional expenses,
including up to $150,000 to develop a sales, marketing and operational
infrastructure to support sales of its new in-home drug detection and
identification system. The Company has used an additional portion of
the proceeds to repay indebtedness owed by its Canadian subsidiary to
its Bank.
Investment Activities
Purchases of fixed assets for the nine months ended September 30, 1995
were approximately $319,000. The Company anticipates that for the
balance of 1995 it will require approximately $20,000 in capital
additions. The funds required for this equipment would be provided by
financing or investment activities. The Company has no additional major
commitments for capital purchases at this time.
BRL had determined that its current facility is no longer adequate for
its purpose and accordingly had, as of July 29, 1995, signed a lease for
a new, more modern, facility. Pursuant to the terms of the new lease,
as an incentive to enter into the lease, the landlord will reimburse BRL
for substantially all the expenses incurred in the relocation. The new
facility is in the same general location as BRL's existing facility.
The annual operating expenses under the new lease are substantially the
same as they would have been under the former lease. The Company
commenced BRL's relocation in mid-September.
Inflation
Inflation was not a material factor in either the sales or the operating
expenses of the Company during the periods presented herein.
OPERATION HELD FOR SALE
Quarter Ended September 30, 1995 Compared to Quarter Ended September 30,
1994
Sales of Services for the three months ended September 30, 1995 of
$1,867,000 represents an increase of $307,000 (19.7%) from the same
period in 1994. The Environmental Division experienced an increase in
sales of $523,000 (69.6%) due to volume increases of $157,000 from
existing customers requesting radiochemical analyses and an existing
customer's special project, which generated sales of $138,000 for the
three months ended September 30, 1995. Additional increases were due to
volume increases of $149,000 from other existing customers, and new
customer's sales of $79,000 in the three months ended September 30,
1995. Environmental Division October, 1995 sales were substantially
ahead of October, 1994 sales and Management believes sales for the rest
of the year will equal 1994 sales levels. The Mineral Division, which
includes Labco's Mexican operation, experienced a decrease of $216,000
(19.7%) due to customer's cancellation of drilling projects as a result
of the severe wet weather in the Sierra Mountains of California and
Nevada in April and May 1995. Additionally, there were 1995 volume
decreases related to non-recurring 1994 sales of $90,000 from two
special one time projects. These decreases were offset by sales
increase in Mexico of $89,000 due to the addition of new customers in
Mexico. Mineral Division sales should continue to increase for the rest
of the year, but will still be below 1994 sales levels.
Gross profit as a percentage of sales for the three months ended
September 30, 1995 was 34.9% as compared to 25.7% for the same period in
1994. This increase was primarily due to higher Environmental Division
sales, production efficiencies in the Environmental Division resulting
from higher sales, and fixed costs allocated over a larger sales base.
Selling, general, and administration expenses for the three months ended
September 30, 1995 of $336,000 were at approximately the same level as
those from the 1994 period.
Other expenses for the three months ended September 30, 1995 were
$20,000 compared to $23,000 for the same period in 1994. This decrease
in other expenses of $3,000 was due to higher interest income and higher
other income, which increased $18,000 from 1994, offset by strategic
alliance expense of $18,000 and translation loss of $3,000. Other
income of $3,000 was higher than 1994 other expenses of $14,000, the
latter of which reflected compensation expense of $13,000 related to
short term borrowings from a related party. Strategic alliance expense
is related to professional fees paid to an independent investment
banking firm to evaluate Labco and to identify potential sources of
additional debt or equity financing.
For the three months ended September 30, 1995, Labco had income before
income taxes of $295,000 compared to income before income taxes of
$43,000 for the same period in 1994. This increase of $252,000 was
primarily due to higher Environmental sales, production efficiencies in
the Environmental Division, fixed costs allocated over a larger sales
base, and higher interest income, offset by strategic alliance expense
of $18,000 and translation loss of $3,000.
Nine Months Ended September 30, 1995 Compared to Nine Months Ended
September 30, 1994
Sales of Services for the nine months ended September 30, 1995 of
$4,956,000 represents an increase of $566,000 (12.9%) from the same
period in 1994. The Environmental Division experienced an increase of
$1,126,000 (50.4%) due to volume increases of $408,000 from existing
customers requesting radiochemical analyses, an existing customer's
large project, which generated sales of $254,000, additional volume
increases of $31,000 from other existing customers and new customer's
sales of $193,000. Additionally, there was another customer special
project which generated sales of $240,000 in the nine months ended
September 30, 1995. Environmental Division October, 1995 sales were
ahead of October, 1994 sales and Management believes sales for the rest
of the year will equal 1994 sale levels. The Mineral Division, which
includes Mexico, experienced a decrease in sales of $560,000 (25.9%) due
to customer volume decreases in the first five months of 1995 related to
the cancellation of drilling projects caused by severe wet weather in
the Sierra Mountains of California and Nevada.
Additionally, there were 1995 volume decreases related to non-recurring
1994 sales of $283,000 from two special one time projects. These
decreases were offset by sales in Mexico of $324,000 for the nine
months ended September 30, 1995 compared to sales of $15,000 in Mexico for
the same period in 1994.
Gross profit as a percentage of sales for the nine months ended
September 30, 1995 was 30.6% as compared to 21.9% for the same period in
1994. This increase was primarily due to higher Environmental Division
sales, production efficiencies in the Environmental Division resulting
from higher sales, and fixed costs allocated over a larger sales base.
Selling, general and administrative expenses for the nine months ended
September 30, 1995 of $1,025,000 increased by $27,000 (2.7%) from the
same period in 1994 primarily due to higher general and administrative
expenses, including travel, directors fees, and professional fees.
Other expenses for the nine months ended September 30, 1995 were $80,000
compared to other income of $41,000 for the same period in 1994. This
increase in other expenses of $121,000 was due to income of $76,000 from
the net recovery of a contingency reserve in the nine months ended
September 30, 1994, 1995 expenses consisting of a non-recurring charge
of $20,000, strategic alliance expense of $30,000, and translation loss
of $19,000 from Labco's Mexican subsidiary, offset by higher interest
income and other income. The non-recurring charge is Labco's estimated
cost to dispose of six 50-gallon barrels of hazardous waste, for which
Labco had previously paid, however, the vendor went out of business. As
such under current environmental laws and regulations, Labco is still
responsible for the proper disposal of this waste. Strategic alliance
expense is related to professional fees paid to an independent
investment banking firm to evaluate Labco and to identify potential
sources of additional debt or equity financing. The recovery of the
contingency reserve in the three months ended September, 1994 was
related to the warranties, representations, and guarantees made by Labco
in the 1992 sale of its Canadian subsidiary. These warranties,
representations, and guarantees expired on May 31, 1994.
For the nine months ended September 30, 1995, Labco had income before
income taxes of $413,000 compared to income before income taxes of
$3,000 for the same period in 1994. This increase in income of $410,000
was primarily due to higher Environmental sales, production efficiencies
in the Environmental Division, and fixed costs allocated over a larger
sales base. These increases were offset by higher general and
administrative expenses, the non-recurring charge of $20,000, strategic
alliance expense of $30,000, translation losses of $19,000, relating to
Mexican currency and the recovery of the contingency reserve of $76,000,
which incurred in 1994.
Capital Resources and Liquidity
Cash and cash equivalents totaled $333,000 at September 30, 1995,
compared with $39,000 at December 31, 1994. The $294,000 increase in
cash and cash equivalents resulted from cash provided by operating
activities of $712,000 which was offset by cash used in investing
activities of $164,000 and net cash used in financing activities of
$254,000 primarily for the reduction of long-term debt.
Cash used for investing activities was for the purchase of property and
equipment consisting of $70,000 of lab equipment, $60,000 of vehicles,
and $34,000 of computer hardware and software to upgrade the Laboratory
Information Management System.
Labco has a working line of credit from a lending institution. This
line of credit is equal to 80% of Labco's eligible accounts receivable.
This line of credit is used to fund Labco's current working capital
requirements and has also been used to guarantee a $150,000 letter of
credit required by the Colorado Department of Health to increase the
level of Labco's Radiochemistry License. This increase in the license
gives Labco the ability to grow the radiochemistry analytical business.
Management believes that the existing line of credit agreement is
adequate to meet Labco's working capital requirements for the next 12
months.
Inflation
Inflation was not a material factor in either the sales or the operating
expenses of Labco during the periods presented herein.
PART II - - OTHER INFORMATION
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1995 Annual Meeting of the Stockholders of the Company was
held on August 30, and reconvened on September 14, 1995.
(b) Not applicable
(c)(1) The results of the voting at the Annual meeting of the
Stockholders were as follows:
1. Election of Directors:
Nominee For Withheld
Stanley S. Binder 11,762,189 372,511
John H. Davies 11,770,631 364,069
John J. Harte 11,765,631 369,069
Richard D. Condon 11,766,631 368,069
John D. Abernathy 11,770,059 364,109
James C. McGrath 11,766,631 368,069
2. Amendment to the Company's Certificate of Incorporation to
effect a one-for-four reverse stock split of the Company's common stock,
par value $0.01 per share ("Common Stock"):
Holders of the Common Stock
For:11,034,253 Against:732,410 Abstain:128,324 Not-voted:239,715
Holders of the Preferred Stock
For: 214,226 Against:6,875 Abstain:18,612 Not-voted:134,637
Holders of All Classes of Stock
For:11,248,479 Against:739,285 Abstain:146,936 Not-voted:374,352
3. The ratification of the appointment of BDO Seidman, LLP, as
independent auditors of the Company's 1995 financial statements.
For: 11,855,243 Against: 110,149 Withheld:169,308
(c)(2) The results of the voting at the reconvened Annual Meeting
of Stockholders were as follows:
1. Amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of capital stock of the Company
from 7,000,000 to 12,000,000, comprised of 7,000,000 shares of Common
Stock, 1,000,000 shares of Convertible Preferred Stock, par value $1.25
per share and 4,000,000 shares of Preferred Stock, par value $2.00 per
share.
Holders of the Common Stock
For:6,458,821 Against:1,278,602 Abstain: 1,124,950 Not-voted: 3,3554,424
Holders of the Class A Preferred Stock
For: 399,009 Against:25,488 Abstain: 0 Not-voted: 0
Holders of the Class B Preferred Stock
For: 271,234 Against: 0 Abstain: 0 Not-voted: 0
Holders of All Classes of Stock
For: 7,129,064 Against: 1,304,090 Abstain: 1,124,950 Not-voted: 3,554,424
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K.
Item 5. Other Events - On September 28, 1995 the Company
filed a Report on Form 8-K regarding its entry into an
agreement with the Toronto-Dominion Bank.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
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.
BARRINGER TECHNOLOGIES INC.
(Registrant)
/S/ Stanley S. Binder
_____________________
Stanley S. Binder
President
/S/ Richard S. Rosenfeld
________________________
Richard S. Rosenfeld
Vice President, Finance,
Chief Financial Officer,
(Principal Accounting Officer
and Principal Financial Officer)
Date: November 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAIN SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM BARRINGER TECHNOLGIES' INC.'S
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
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