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 March 31, 1995
___ 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 Office) (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 CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
May 9, 1995 - 12,736,828 of Common Stock, $.01 par value.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
INDEX
Part I Financial Information
- Consolidated Balance Sheets as of March 31, 1995
(unaudited) and December 31, 1994;
- Consolidated Statements of Income (unaudited)
for the three months ended March 31, 1995 and 1994;
- Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 1995 and 1994;
- Consolidated Statement of Shareholders' Equity for
the three months ended March 31, 1995;
- Notes to Consolidated Financial Statements;
- Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II Other Information
Signatures
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, March 31, Dec. 31,
1995 1995 1994
Pro-forma (unaudited)
(unaudited)
(Note 5)
ASSETS
Current assets:
Cash $ 770 $ 20 $ 267
Trade receivables, less
allowances of $521, 2,478 2,478 2,565
$521 and $539
Inventories 1,694 1,694 1,790
Prepaid expenses 142 142 220
Net assets held for sale 755 755 -
(note 4)
Deferred tax asset 225 225 225
Total current assets 6,064 5,314 5,067
Property and equipment 603 603 1,364
Other assets 71 71 361
Total assets $6,738 $5,988 $6,792
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, March 31, Dec. 31.
1995 1995 1994
pro-forma
(unaudited) (unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Bank indebtedness and other $ 1,323 $ 1,323 $ 1,160
notes (Note 6)
Accounts payable 1,532 1,532 1,632
Accrued liabilities 1,503 1,503 1,393
Liabilities to operation 504 504 -
held for sale
Current portion of long term - - 230
debt
Total current liabilities 4,862 4,862 4,415
Long-term debt, net of current 300 300 451
portion
Total liabilities 5,162 5,162 4,866
Minority interest - - 740
Shareholders' equity (note 5)
Convertible preferred stock,
$1.25 par value, 1,000 shares
authorized, 445 shares 555 555 555
outstanding
Class A convertible preferred
stock, $2.00 par value, 1,000
shares authorized, 83 shares 101 101 101
outstanding less discount of
$65
Class B convertible preferred
stock, $2.00 par value, 730
shares authorized, 392 shares 635 635 635
outstanding
Common stock, $.01 par value,
20,000 shares authorized,
12,736, 11,486 and 11,486 127 115 115
shares outstanding
Additional paid-in capital 16,688 15,950 15,950
Accumulated deficit (16,001) (16,001) (15,633)
Foreign currency translation (516) (516) (524)
_____ ________ ______
1,589 839 1,199
Less: common stock in treasury
at cost, 124 shares (13) (13) (13)
Total shareholders' equity 1,576 826 1,186
Total liabilities and equity $ 6,738 $ 5,988 $6,792
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Three months ended
March 31,
1995 1994
(Restated)
Revenues from operations $ 1,328 $2,480
Cost of sales 967 1,396
Gross profit 361 1,084
Operating expenses:
Selling, general and
administrative 629 639
Unfunded research and
development 34 66
_____ ___
663 705
Operating income (loss) (302) 379
Other income (expense):
Interest expense (62) (46)
Other (5) 17
____ ____
(67) (29)
Income (loss) from continuing
operations (369) 350
Operation held for sale (note 4) 1 17
Net income (loss) for the period (368) 367
Preferred stock dividend requirement (27) (27)
Net income (loss) attributable
to common shareholders $ (395) $ 340
Per Share Data (note 3):
Continuing operations $ (.03) $ .03
Operation held for sale - -
Net income (loss) per share $ (.03) .03
Weighted average shares outstanding 11,486 11,090
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
(UNAUDITED)
Class
Class A Class B Foreign
Conv. Conv. Conv. Currency
Common Paid-in Pref. Pref. Pref. Transl.
Stock Capital Stock Stock Stock Deficit Adjust.
Balance- 115 15,950 555 101 635 (15,633) (524)
January
1, 1995
Current 8
period
adjustment
Net Loss ______ _____ ___ ___ ____ (368) _____
Balance-
March 115 15,950* 555 101 635 (16,001) (516)
31, 1995
______________________________________________
* Net of notes receivable of $274 from sale of stock
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended March 31,
1995 1994
Operating Activities
Net income (loss) for the period $ (368) $ 367
Items not affecting case
Depreciation/amortization 232 158
Minority interest - 19
Other 8 (88)
Decrease (increase) in non-cash
working capital balances
related to:
Continuing operations (81) (1,257)
Operation held for sale 352 -
Cash provided by (used
in) operating activities 143 (801)
Investing Activities
Purchase of property and
equipment and other (177) (73)
Other (5) 91
Operation held for sale 10 -
Cash provided by (used in)
investing activities (172) 18
Financing Activities
Reduction in long-term debt (64) (78)
Increase in bank debt and other 240 334
Proceeds on issuance of securities - 109
Operation held for sale (394) -
Cash provided by (used in)
financing activities (218) 365
(Decrease) in cash and cash (247) (418)
equivalents
Cash at beginning of period 267 486
Cash at end of period $ 20 $ 68
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
Three Months ended March 31,
1995 1994
Changes in components of non-cash
working capital balances
related to continuing operations:
Receivables $ (797) $ (780)
Inventory 96 (645)
Other current assets 30 (55)
Accounts payable and 590 180
accrued expenses
Other current liabilities - 43
Decrease (increase) in non-
cash working capital
balances $ (81) $ (1,257)
Cash paid during the period $ 55 $ 31
for interest
Cash paid during the period
for income taxes $ - $ -
See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 March 31,
1995 and the results of its operations and its cash flows for the
three months ended March 31, 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 Annual Report on 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
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.
4. The Company maintains voting control of more than 50% of
Labco's common stock through an irrevocable agreement with
another Labco shareholder that 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 Barringer Laboratories Inc. ("Labco"). As a result,
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 anticipates
doing 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 restated to
reflect Labco as held for sale.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The following is the condensed results of operations and
condensed balance sheet for Labco.
Condensed Results of Operations
For the three months ended March 31,
(in $000's)
1995 1994
Revenues 1,442 1,552
Cost of revenues 1,080 1,157
Gross profit 362 395
Expenses 359 359
Minority interest 2 19
Net income 1 17
Condensed Balance Sheet
As of March 31, 1995
(In $000's)
Current assets 1,470
Property and equipment 706
Other assets 80
Total assets 2,256
Current liabilities 852
Long-term debt 124
Equity 1,280
Total liabilities 2,256
and equity
5. Subsequent Event/Pro-forma - 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 consists of 10,000 shares of the Company's
common stock and a five year warrant to purchase 10,000 shares of
the Company's common stock at $.50 per share. In addition, in
order to induce the institutional investors to enter into this
transaction, an additional three year warrant to acquire 150,000
shares of the Company's common stock at $.50 per share was
issued. The Company will use the proceeds for working capital
purposes.
The pro-forma presentation shows the effect of the private
placement on the financial condition of the Company by increasing
its cash by $750,000 and increasing shareholders' equity by
$750,000.
6. At March 31, 1995, the Company's borrowings under its line
of credit financing arrangement with a Canadian bank, exceeded
the amount available thereunder. On March 23, 1995, the bank and
the Company reached an informal understanding under which the
bank has acknowledged that the Company will need additional time
to come in compliance with the collateral formula used to
determine borrowing ability. The bank has indicated that the
period of time within which the Company should come back into
compliance is three to six months, however, no assurance can be
given as to whether or when the Company will come back into
compliance with such formula and as to actions to be taken by the
bank.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In order to devote its full resources to its instrument business,
primarily the further development, marketing and production of
its new Model 400 Ionscan and the Company's newly introduced
consumer product DrugAlert, the Company has decided to sell its
47% ownership in Labco. Labco is an analytical services company,
principally engaged in environmental monitoring, geochemical
analysis and image processing for the hydrocarbon, and mineral
exploration industries. Since this represents the disposal of a
separate and distinct business segment, the Company's financial
statements, where appropriate, have been restated. 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 March 31, 1995 Compared To Quarter ended March 31,
1994
Instruments sales for the quarter ended March 31, 1995 decreased
by $1,644,000 or 67.7%, over the same period last year. The
decrease was caused by several factors. The quarter ended March
31, 1994 was favorably impacted by the completion of the major
portion of the Eurotunnel contract and related sales. The
pending introduction of the Company's new Model 400 IONSCAN has
caused a deferral of purchases until the new Model 400 is
available. It is anticipated that units will become available
late in the second quarter of 1995. Furthermore, because the
Company relies upon sales to governmental agencies, which are
subject to mandated procurement processes and budgetary
constraints, the selling cycle for its products often extends
over long periods, which can result in significant variations in
quarterly sales. The Company believes that its sales in the
first quarter of 1995 were impacted by these factors. Because of
the announcement of the Model 400, the Company has reduced the
selling price of its existing Model 350 units.
Sales of the research and development business during the first
quarter of 1995, increased by $492,000, or 946%, compared to the
same quarter last year. The increase was the result of the
Company being awarded a Cdn. $1,967,000 contract in late 1994.
The project is for the design and construction of an airborne
laser-fluorosensor system. The system will utilize advanced
laser and other electro-optic technologies 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.
Gross profit for the Instrument and Research and Development
Businesses as a percentage of sales for the quarter ended March
31, 1995 decreased from 43.7% for the quarter ending March 31,
1994 to 27.2% for the first quarter of 1995. The gross profit
percentage on research and development increased from 3.8% for
the first quarter of 1994 to 4.6% for the first quarter 1995.
The gross profit percentage on instrument sales decreased from
44.6% for the first quarter of 1994 to 42.9% for the first
quarter of 1995. The lower gross profit in the instrument's
segment was due primarily to the sale of several Model 400
prototype units to a single customer at an introductory price.
Selling, general and administrative expenses for the quarter
ended March 31, 1995 decreased by $10,000, or 1.6%, over the
comparable period last year. Selling and marketing expenses
increased by $20,000 while general and administrative expenses
decreased by $30,000. The Company continues to closely monitor
its expenses.
Unfunded research and development, primarily applied to IONSCANr
technology, decreased by $32,000 or 48.5%. The Company presently
intends to increase its research and development expenditures in
order to develop additional applications for IONSCAN as funds
become available.
Interest expense increased by $16,000 due to higher levels of
borrowings and increased interest rates.
Other expense, net of income, in the first quarter of 1995 was
$5,000 as compared to other income, net of expense, of $17,000
for the same period last year. In the first quarter of 1994 the
Company had a foreign exchange gain of $22,000 versus a loss of
$5,000 for the comparable quarter in 1995.
Income (loss) from operations of the instrument and research and
development businesses was a loss of $369,000 for the quarter
ended March 31, 1995 as compared to a profit of $367,000 for the
quarter ended March 31, 1994. Reduced sales, higher interest
expense and lower other income accounted for the loss.
Capital Resources and Liquidity
Operating Activities
The Company's reduced level of sales activity during the year
ended December 31, 1994 and the first quarter of 1995 and the
resultant losses of $2,565,000 and $368,000, respectively,
resulted in a severe cash shortage during the last half of 1994
and during the first quarter of 1995. The Company has cut
operating expenses and restructured its payments to suppliers to
conserve cash.
On March 28, 1995, the Company introduced a new consumer product,
which is an in-home drug detection and identification kit
available to consumers that will allow them to determine the
presence of illicit drugs from the sampled areas. The Company
has received a substantial number of requests from individuals
wishing to market the product on behalf of the Company. The
Company is presently evaluating those requests and has hired a
product manager to assist in that effort as well as develop and
execute a marketing plan.
The Company is currently seeking buyers for its investment in
Labco and anticipates selling its investment sometime during the
year.
Financing Activities
The Company presently has an interest bearing note payable to
Labco in the amount of $452,000 due December 31, 1995. At
December 31, 1994, the Company was in arrears on its interest
payments pursuant to such notes in the approximate amount of
$18,000. In early 1995, the terms of that indebtedness were
amended to extend the due date from May 31, 1995 to December 31,
1995. Accrued interest (including past due amounts) will be due
June 30, 1995. In consideration of the amendment, Labco received
two-year warrants to purchase 25,000 shares of Common Stock at an
exercise price of $1.00 per share. It is the intent of the
Company to repay the principal of that note on or before the
amended due date from funds generated from either the sale of its
47% interest in Labco, or from the proceeds from the sale of the
Company's securities, or a combination thereof. If it is unable
to pay the principal when due, the Company presently intends to
negotiate an additional extension of time in which to pay such
principal. If the Company is unsuccessful in obtaining an
extension of time during which to pay the principal, the Company
could lose its investment in Labco.
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.
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 consists of 10,000 shares of
the Company's common stock and a five year warrant to purchase
10,000 shares of the Company's common stock at $.50 per share.
In addition, in order to induce the institutional investors to
enter into this transaction, an additional three year warrant to
acquire 150,000 shares of the Company's common stock at $.50 per
share was issued. The Company will use the proceeds for working
capital purposes, principally for manufacturing the Company's new
Model 400 IONSCANr and related sales and promotional expenses and
will use up to $150,000 to develop a sales, marketing and
operational infrastructure to support sales of its new in-home
drug detection and identification kit.
Investment Activities
Purchases of fixed assets for the quarter ended March 31, 1995
were approximately $133,000. The Company anticipates that for
the balance of 1995 it will require approximately $200,000 in
capital additions. The Company has no major commitments for
capital purchases at this time. The funds required for this
equipment would be provided by financing or investment
activities.
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 March 31, 1995 Compared to Quarter ended March 31,
1994
Sales of services for the three months ended March 31, 1995 of
$1,442,000 represents a decrease of $110,000 (7.1%) from the same
period in 1994. The Environmental Division experienced an
increase in sales of $93,000 (10.3%) primarily due to an existing
customer's large project which generated sales of $198,000 for
the three months ended March 31, 1995, offset by volume decreases
of $105,000 from other existing customers. The Mineral Division
experienced a decrease of $203,000 (31.4%) due to customer volume
decreases caused by severe wet weather in the Sierra Mountains of
California and Nevada. Additionally, there was an $88,000
special one time project in the three months ended March 31,
1994. These decreases were offset by sales in Mexico of $64,000
for the three months ended March 31, 1995 compared to no sales
for the same period in 1994. The continual wet weather in the
Sierra Mountains has caused the Mineral Division's April 1995
sales volume to be behind April 1994.
Gross profit as a percentage of sales for the three months ended
March 31, 1995 was 25.0% as compared to 25.4% for the same period
in 1994. This decrease was due to production inefficiencies in
the Mineral Division lab caused by lower sales.
Operating expenses for the three months ended March 31, 1995 of
$350,000 increased by $8,000 (2.3%) from the same period in 1994
primarily due to higher travel expenses and directors' expenses.
Other expenses for the three months ended March 31, 1995 were
$8,000 compared to $17,000 for the same period in 1994. This
decrease of $9,000 was primarily due to lower financing costs
associated with the working line of credit.
Income before income taxes for the three months ended March 31,
1995 was $3,000 compared to income of $36,000 for the same period
in 1994. This decrease of $33,000 was primarily due to volume
decreases in sales and production inefficiencies in the Mineral
Division, and higher selling/general administration expenses,
offset by lower financing costs associated with the working line
of credit.
Capital Resources and Liquidity
Cash totaled $32,000 at March 31 1995, compared with $39,000 at
December 31, 1994. The $7,000 decrease in cash resulted from
cash provided by operating activities of $44,000 which was offset
by cash used for the purchase of equipment of $46,000 and net
cash used in financing activities of $5,000.
Cash used for purchase of property and equipment of $46,000 was
for lab equipment to support increased sales in the Environmental
Division.
The Company is currently seeking to sell its investment in Labco.
If the investment is sold, the proceeds would be used to pay down
the note due Labco. Labco is carrying the note as a non-current
asset.
Labco has a working line of credit from a lending institution.
This line of credit availability is equal to 80% of Labco's
eligible accounts receivable. This line of credit is funding
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.
Labco's management believes that the existing line of credit 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.
Labco continues to evaluate its Mexican subsidiary operations to
determine if it will be affected by the devaluation of the
Mexican peso and the high inflationary rate in Mexico. At March
31, 1995, the Mexican subsidiary comprised less than 10% of the
total assets and revenues of Labco.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
N O N E
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant had duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BARRINGER TECHNOLOGIES INC.
(Registrant)
STANLEY S. BINDER
Stanley S. Binder, President
RICHARD S. ROSENFELD
Richard S. Rosenfeld
Principal Accounting Officer
Chief Financial Officer
Date: May 12, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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