BARRINGER TECHNOLOGIES INC, SB-2/A, 1996-10-24

BARRINGER TECHNOLOGIES INC
SB-2/A, 1996-10-24
TESTING LABORATORIES

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<PAGE> 1

REGISTRATION NO. 333-13703

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BARRINGER TECHNOLOGIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3829 84-0720473
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
</TABLE>

219 SOUTH STREET, NEW PROVIDENCE, NEW JERSEY 07974
(908) 665-8200

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

STANLEY S. BINDER, PRESIDENT
BARRINGER TECHNOLOGIES INC.
219 SOUTH STREET, NEW PROVIDENCE, NEW JERSEY 07974
(908) 665-8200
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C>
JOHN D. HOGOBOOM, ESQ. ARTHUR M. BORDEN, ESQ.
LOWENSTEIN, SANDLER, KOHL, FISHER & BOYLAN, P.A. ROSENMAN & COLIN LLP
65 LIVINGSTON AVENUE 575 MADISON AVENUE
ROSELAND, NEW JERSEY 07068 NEW YORK, NEW YORK 10022
(201) 992-8700 (212) 940-8790
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C>
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED PER SECURITY OFFERING PRICE FEE
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Common Stock, $.01 par value........................ $9.32(1) $13,397,500(1) $4,060
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Common Stock Purchase Warrants...................... $.05 $71,875 $22
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Common Stock, $.01 par value, underlying Common
Stock Purchase Warrants(2)........................ $9.32(1) $3,349,375(1) $1,015
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Underwriter's Warrants.............................. $.0012 $150 $1
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Common Stock, $.01 par value, underlying
Underwriter's Warrants(2)......................... $9.32(1) $1,165,000(1) $354
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Common Stock Purchase Warrants underlying
Underwriter's Warrants(2)......................... $.05 $6,250 $2
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Common Stock, $.01 par value, underlying Common
Stock Purchase Warrants underlying Underwriter's
Warrants(2)....................................... $9.32(1) $291,250(1) $89
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</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 on the basis of the
average of the high and low bid prices for a share of Common Stock on The
NASDAQ SmallCap Market on October 21, 1996.

(2) Pursuant to Rule 416, this Registration Statement also relates to (i) an
indeterminate number of additional shares of Common Stock issuable upon
exercise of the Warrants pursuant to anti-dilution provisions contained
therein, and (ii) an indeterminate number of additional shares of Common
Stock and Warrants issuable upon the exercise of the Underwriter's Warrants
pursuant to anti-dilution provisions contained therein.

(3) $4,568 of such registration fee was paid at the time of the original filing
of the Registration Statement.

------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
sECURITIES AND eXCHANGE cOMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 24, 1996

PROSPECTUS

LOGO
BARRINGER TECHNOLOGIES INC.

1,250,000 SHARES OF COMMON STOCK

AND

1,250,000 COMMON STOCK PURCHASE WARRANTS

Barringer Technologies Inc., a Delaware corporation (the "Company"), hereby
offers 1,250,000 shares (the "Shares") of common stock, $.01 par value per share
(the "Common Stock"), and 1,250,000 Common Stock Purchase Warrants (the
"Warrants"). The Shares and Warrants are sometimes hereinafter collectively
referred to as the "Securities." Each Warrant is exercisable for three years and
entitles the registered holder to purchase one-quarter of a share of Common
Stock at an exercise price of $ per share [115% of the initial offering price
per share]. The Warrant exercise price and the number of shares issuable upon
exercise of the Warrants are subject to adjustment under certain circumstances.
The Company may redeem outstanding Warrants commencing six months after the date
of this Prospectus on not less than 30 days' notice at a price of $.25 per
Warrant if the closing bid price of the Common Stock averages in excess of 200%
of the applicable exercise price for a period of 30 days ending within 15 days
of the redemption notice date. The Shares and the Warrants may only be purchased
together, but will be separately transferable immediately following the
completion of the Offering.

The Common Stock is traded on The NASDAQ SmallCap Market under the symbol
"BARR." The Company has applied to include the Common Stock and the Warrants on
The NASDAQ National Market System ("NMS"). On October 23, 1996, the closing sale
price of the Common Stock as reported by NASDAQ was $10.63 per share. See "Price
Range of Common Stock."

------------------------

SEE "RISK FACTORS" ON PAGE 8 FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share................................ $ $ $
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Per Warrant.............................. $ $ $
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Total(3)................................. $ $ $
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</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933 (the
"Securities Act"). The Company also has agreed to issue warrants to the
Representative of the Underwriters to purchase 125,000 shares of Common
Stock and 125,000 Common Stock Purchase Warrants, in each case at an initial
exercise price of 115% of the initial offering price. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $475,000 and a
2% non-accountable expense allowance payable to the Representative of the
Underwriters. See "Underwriting."

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 187,500 additional shares of Common Stock and 187,500 Warrants solely to
cover over-allotments, if any. If such option is exercised in full, the
total Price to Public, Underwriting Discounts and Commissions and Proceeds
to Company will be $ , $ and $ , respectively.

------------------------

The Securities are being offered on a firm commitment basis by the
Underwriters named herein, subject to prior sale, when, as and if delivered to
and accepted by them subject to certain conditions. It is expected that
certificates for the Securities offered hereby will be available for delivery on
or about , 1996, at the office of Janney Montgomery Scott Inc., 26
Broadway, New York, New York.
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JANNEY MONTGOMERY SCOTT INC.

, 1996
<PAGE> 3
Photo #1

Shows a picture of the Company's IONSCAN(R) Model 400, a portable desk-top
instrument that utilizes a proprietary implementation of ion mobility
spectrometry technology to determine the presence or absence of targeted
compounds in a sample.

Photo #2

Shows a technician using a sampling cloth to collect particle samples from
a piece of carry-on luggage for testing with the Model 400 IONSCAN(R).

Photo #3

Shows a technician using a glove to collect particle samples from a piece
of carry-on luggage for testing with the Model 400 IONSCAN(R).

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND THE WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ SMALLCAP MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE "UNDERWRITING."

2
<PAGE> 4

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, NW, Washington, D.C. 20549; and at the Commission's Regional Offices at
500 West Madison, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at its principal
office at Room 1024, 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding issuers, such as the
Company, that file electronically with the Commission and the address of such
Web site is http://www.sec.gov. The Common Stock currently is included in The
NASDAQ SmallCap Market, under the symbol BARR, and reports, proxy statements and
other information regarding the Company can be inspected at the offices of the
National Association of Securities Dealers, Inc. at 33 Whitehall Street, 10th
Floor, New York, New York 10004.

The Company has filed with the Commission a Registration Statement on Form
SB-2 (together with all amendments thereto, the "Registration Statement") under
the Securities Act with respect to the Securities offered hereby (the
"Offering"). This Prospectus does not contain all of the information set forth
in the Registration Statement and exhibits thereto, certain portions of which
have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the
Securities offered hereby reference is made to the Registration Statement and
related exhibits and to documents filed with the Commission. Any statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference. Copies of the Registration
Statement and the exhibits thereto are on file at the offices of the Commission
and may be obtained, upon payment of the fee prescribed by the Commission, or
may be examined without charge at the public reference facilities of the
Commission described above.

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Such
statements include, but are not limited to, the anticipated growth in the demand
for the Company's products, the Company's opportunities to increase sales
through, among other things, the development of new applications, markets and
extension of its IONSCAN(R) products, the development of new IONSCAN(R)
products, the probability of the Company's success in the sales of its
IONSCAN(R) products in current markets, governmental regulations and directives
changing security requirements, liquidity and capital requirements and use of
proceeds.

Forward-looking statements are inherently subject to risks and
uncertainties, many of which can not be predicted with accuracy and some of
which might not even be anticipated. Future events and actual results, financial
and otherwise, could differ materially from those set forth in or contemplated
by the forward-looking statements herein. Important factors that could
contribute to such differences are set forth below under "Risk Factors,"
including, but not limited to, "History of Losses," "Cash Constraints,"
"Dependence on and Effects of Governmental Regulation," "Dependence on
IONSCAN(R) and Market Acceptance," "Dependence on New Product Development;
Technological Advancement" and "Competition."

3
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements, including the Notes thereto,
appearing elsewhere in this Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety. Unless otherwise indicated, all
information herein has been adjusted to give effect to the one-for-four reverse
split of the Common Stock effected on September 25, 1995 and assumes (i) no
exercise of the Warrants; (ii) no exercise of the Underwriters' over-allotment
option; (iii) no exercise of the Warrants issuable to the representative of the
Underwriters (the "Underwriter's Warrants"), and (iv) no exercise or conversion
of outstanding securities, including options, exercisable for or convertible
into Common Stock. See "Description of Capital Stock," "Description of Warrants"
and "Underwriting." Unless the context otherwise requires, all references in
this Prospectus to the Company refer to Barringer Technologies Inc. and its
subsidiaries.

THE COMPANY

Barringer Technologies Inc. (the "Company") is principally engaged in the
design, development, manufacture and sale of analytical instruments used for the
high sensitivity detection of trace amounts of plastic and other explosives and
illegal narcotics. The Company's principal product, the IONSCAN(R), is a
portable, desk-top instrument that utilizes a proprietary implementation of ion
mobility spectrometry ("IMS") technology to determine the presence or absence of
targeted compounds in a sample. The IONSCAN(R) can detect targeted substances in
amounts smaller than one-billionth of a gram in approximately six seconds. See
"Business -- IONSCAN(R) Technology."

The Company's customers are primarily governmental, security and law
enforcement agencies throughout the world, including the Federal Bureau of
Investigation (the "FBI"), the Drug Enforcement Agency (the "DEA"), the General
Services Administration (the "GSA"), the United States, French, and Canadian
customs services and various airports worldwide. Because of its high
sensitivity, the IONSCAN(R) is used both in lieu of and in conjunction with
other detection technologies, such as X-ray, computer aided tomography
("CATSCAN"), quadropole resonance and nuclear magnetic resonance imaging. As of
June 30, 1996, the Company had sold over 300 IONSCAN(R)s, and the Company
believes that, in terms of units sold, it is the world's leading supplier of
trace particle detection instruments. See "Business -- Overview."

IONSCAN(R)s have been sold for explosives detection applications primarily
outside the United States and for drug interdiction and detection both within
the United States and elsewhere. For example, the IONSCAN(R) is used in foreign
airports, on trains and at the Eurotunnel to check for explosives and by the
United States Coast Guard to check ships and cargo in U.S. territorial waters
for illegal narcotics. The Company believes that the security-related market for
the IONSCAN(R) is growing as a result of governmental actions, particularly in
the United States, which reflect heightened public safety concerns in the wake
of an increasing number of terrorist acts. Recently, Congress appropriated
$144,000,000 for the purchase of enhanced explosives detection equipment for use
at certain airports in the United States, and the Company believes that a
portion of such appropriation will be utilized for the acquisition of trace
particle detection equipment. The Company also believes that additional growth
will occur in the drug interdiction market for the IONSCAN(R) as a result of
recently reported increases in domestic drug usage, particularly among
teenagers. However, no assurance can be given as to the growth of either the
security-related market or the drug interdiction market for the IONSCAN(R).

The Company's objective is to strengthen its position as the leading
supplier of trace detection equipment by (i) further penetrating existing
markets for the IONSCAN(R) through aggressive pursuit of additional sales, (ii)
expanding the uses of the IONSCAN(R), particularly for security screening of
individuals and for process control and quality assurance in certain industrial
applications, and (iii) extending the capabilities and the potential uses of the
IONSCAN(R) for environmental, biological and chemical testing by, among other
things, combining the IMS technology used by the IONSCAN(R) with other existing
technologies, such as gas chromatography, and by developing a hand-held detector
utilizing the IONSCAN(R) technology. See "Business -- Strategy."

The Company believes that it is well positioned to implement its strategy
as a result of the large installed base of IONSCAN(R)s, the IONSCAN(R)'s
favorable field performance, its low price as compared to other available
detection equipment and its ease of use.

4
<PAGE> 6

THE OFFERING

SECURITIES OFFERED.............. 1,250,000 shares of Common Stock and
1,250,000 Warrants. See "Description of
Capital Stock" and "Description of Warrants."
The Shares and the Warrants may only be
purchased together, but will be separately
transferable immediately following the
completion of the Offering.

DESCRIPTION OF WARRANTS......... Each Warrant is exercisable for three years
and entitles the registered holder to
purchase one-quarter of a share of Common
Stock at an exercise price of $ per
share [115% of the initial offering price per
share]. The Warrant exercise price and the
number of shares issuable upon exercise of
the Warrants are subject to adjustment under
certain circumstances. The Company may redeem
outstanding Warrants commencing six months
after the date of this Prospectus on not less
than 30 days notice at a price of $.25 per
Warrant if the closing bid price of the
Common Stock averages in excess of 200% of
the applicable exercise price for a period of
30 days' ending within 15 days of the
redemption notice date. See "Description of
Warrants."

COMMON STOCK OUTSTANDING BEFORE
OFFERING...................... 3,506,474 shares

COMMON STOCK OUTSTANDING AFTER
OFFERING...................... 4,756,474 shares(1)

USE OF PROCEEDS................. Net proceeds received from the Offering will
be used to fund product development, to repay
certain indebtedness, to expand the Company's
manufacturing and assembling capabilities and
for working capital and general corporate
purposes, including possible acquisitions and
joint ventures. See "Use of Proceeds" and
"Business -- Strategy."

PROPOSED NASDAQ NMS SYMBOLS:

COMMON STOCK.................... BARR

WARRANTS........................ BARRW

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(1) Excludes a total of 2,112,369 shares which will be reserved for issuance
upon completion of the Offering, consisting of (i) 312,500 shares of Common
Stock issuable upon exercise of the Warrants, (ii) 481,250 shares of Common
Stock issuable upon exercise of outstanding warrants, (iii) 463,750 shares
of Common Stock issuable upon exercise of outstanding stock options, (iv)
464,244 shares of Common Stock issuable upon conversion of the Company's
outstanding convertible securities, (v) 125,000 shares of Common Stock
issuable upon exercise of the Underwriter's Warrants, and 31,250 shares of
Common Stock issuable upon exercise of the Warrants underlying the
Underwriter's Warrants, and (vi) an aggregate of 234,375 shares of Common
Stock subject to the Underwriters' over-allotment option (collectively, the
"Reserved Shares").

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The summary consolidated financial information set forth below should be
read in conjunction with the Consolidated Financial Statements, including the
Notes thereto, appearing elsewhere in the Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
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1991 1992 1993 1994 1995 1995 1996
------- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues from operations......... $ 1,963 $ 2,838 $7,770 $ 5,514 $ 6,374 $3,110 $5,012
Gross profit..................... 260 627 3,840 1,245 2,570 1,218 2,365
Operating income (loss).......... (3,105) (1,714) 541 (2,469) (886) (186) 667
Income (loss) from continuing
operations.................... (3,324) (1,763) 593 (2,633) (1,178) (356) 564
Income (loss) from operation held
for sale...................... (339) (44) 2 68 351 55 --
Net Income (loss)................ (3,663) (1,807) 595 (2,565) (827) (301) 564
Preferred stock dividends........ (103) (160) (114) (108) (82) (51) (24)
Net Income (loss) attributable to
common stockholders........... (3,766) (1,967) 481 (2,673) (909) (352) 540
Income (loss) per common share
from continuing operations.... (1.84) (0.90) 0.20 (0.97) (0.39) (0.13) 0.15
Net income (loss) per common
share:
Primary....................... (2.02) (0.92) 0.20 (0.95) (0.28) (0.11) 0.16
Fully-diluted................. -- -- -- -- -- -- 0.15
Weighted average common shares
outstanding:
Primary....................... 1,862 2,135 2,570 2,827 3,283 3,060 3,483
Fully diluted................. -- -- -- -- -- -- 3,854
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
ACTUAL AS ADJUSTED(2)
------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................ $ 940 $ 11,209
Current assets............................. 4,828 13,866
Total assets............................... 5,881 14,919
Current liabilities........................ 3,888 2,657
Long-term liabilities...................... 113 113
Stockholders' equity....................... 1,880 12,149
</TABLE>

- ---------------
(1) Amounts for all periods ending prior to December 31, 1995 reflect Barringer
Laboratories Inc. ("Labco") as a discontinued operation. The Company sold a
portion of its equity interest in Labco in December 1995. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations
-- Overview."

(2) As adjusted for the issuance and sale of the Securities offered hereby (at
an assumed initial offering price of $9.50 per Share and $.05 per Warrant),
after deducting the estimated underwriting discounts and estimated offering
expenses payable by the Company and the application of the net proceeds
therefrom. See "Use of Proceeds."

6
<PAGE> 8

RECENT DEVELOPMENTS

UNAUDITED NINE MONTHS RESULTS

The following unaudited financial data with respect to the Company's
consolidated results of operations for the three-month and nine-month periods
ended September 30, 1995 and 1996 reflects, in the opinion of management, all
adjustments, consisting only of normal recurring items, necessary for a fair
presentation of such data. Results for the period ended September 30, 1996 are
not necessarily indicative of the results that can be expected for any other
interim period or for the year ended December 31, 1996 as a whole.

<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER ENDED SEPTEMBER
30, 30,
----------------- -----------------
1995 1996 1995 1996
------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues from operations................................ $1,434 $2,340 $4,544 $7,352
====== ====== ====== ======
Income (loss) from continuing operations................ $ (302) $ 543 $ (658) $1,108
Income (loss) from operation held for sale.............. 139 -- 194 --
------ ------ ------ ------
Net income (loss)............................. $ (163) $ 543 $ (464) $1,108
====== ====== ====== ======
Preferred stock dividends............................... $ 16 $ 11 $ 67 $ 35
====== ====== ====== ======
Primary per share data:
Income (loss) per common share from continuing
operations......................................... $(0.09) $ 0.13 $(0.23) $ 0.28
Income (loss) per common share from operation held for
sale............................................... 0.04 -- 0.06 --
------ ------ ------ ------
Net income (loss) per share................... $(0.05) $ 0.13 $(0.17) $ 0.28
====== ====== ====== ======
Fully-diluted per share data:
Income (loss) per common share from continuing
operations......................................... $(0.09) $ 0.12 $(0.23) $ 0.26
Income (loss) per common share from operation held for
sale............................................... 0.04 -- 0.06 --
------ ------ ------ ------
Net income (loss) per share................... $(0.05) $ 0.12 $(0.17) $ 0.26
====== ====== ====== ======
</TABLE>

7
<PAGE> 9

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating an
investment in the Securities offered hereby.

HISTORY OF LOSSES

CASH CONSTRAINTS

Historically, the Company has not generated net cash flow from operations
and, accordingly, has experienced periodic severe cash shortages. Although the
Company will seek to improve its cash flow through, among other things, the use
of a portion of the proceeds of this Offering and the implementation of its
business strategy, no assurance can be given that the Company will have
sufficient cash to implement such strategy or that implementation of such
strategy will enable the Company to satisfy its long-term cash requirements. See
"Business -- Strategy."

DEPENDENCE ON AND EFFECTS OF GOVERNMENTAL REGULATION

The Company's business is dependent upon purchases of IONSCAN(R)s by
governmental agencies. See "Government and Other Procurement Policies." While
the Company believes that certain of its governmental customers will continue to
purchase IONSCAN(R)s for explosives detection and drug interdiction
applications, growth in the Company's business will be driven in part by the
adoption of regulations or requirements in the aviation security market
resulting in the use of enhanced explosives detection systems, including trace
particle detection equipment. As a result of certain government initiatives in
the United States, including the recent report of the Aviation Safety and
Security Commission (the "Gore Commission"), the Company anticipates that such
regulations or requirements will be adopted in the United States in the near
future. Among other things, the initial Gore Commission report recommended that
the government purchase enhanced explosives detection equipment for deployment
at certain United States airports. In October 1996, Congress appropriated
approximately $1.1 billion to fund certain anti-terrorist programs in fiscal
1997, including the initial recommendations contained in the Gore Commission
report. It is anticipated that approximately $144,000,000 of such appropriation
will be used to purchase enhanced explosives detection equipment. There can be
no assurance that funding for the purchase of such equipment will be continued
in subsequent fiscal years or as to the level thereof. While the recent
government initiatives have contemplated the deployment of trace particle
detection equipment, such as the IONSCAN(R), a substantial amount of the
appropriated funds will be used to purchase equipment utilizing other
technologies, such as CATSCAN, enhanced X-ray, quadropole resonance and other
imaging techniques. Accordingly, there can be no assurance as to the amount that
will ultimately be spent on the purchase of trace particle detection equipment
or as to the number of IONSCAN(R)s that will actually be purchased. In addition,
there can be no assurance that the IONSCAN(R) will meet any certification or
other requirements that may be adopted in connection with such initiatives.

The Company anticipates that the aviation security market will undergo
significant technological changes in the future. As part of its oversight of the
domestic aviation industry, the Federal Aviation Administration (the "FAA")
sponsors research in the area of enhanced explosives detection technologies.
During the last five years, the FAA has spent approximately $150,000,000 on such
research and development activities. The FAA's sponsorship covers a wide range
of areas, such as imaging technologies, individual passenger screening systems,
development of bomb-resistant containers and trace detection methods including
those developed by the Company as well as by other entities. The Gore Commission
recommended dramatically increasing the amount spent on research and development
of enhanced explosives detection technologies and Congress recently increased
the FAA's budget for such research and development activities in fiscal 1997. As
a result of these initiatives, the Company anticipates that new technology will
be introduced into the aviation security

8
<PAGE> 10

market in the future. While the Company believes that its IONSCAN(R) functions
at a state-of-the-art level, there can be no assurance that the Company will be
able to maintain its present position in this market. See "Dependence on New
Product Development; Technological Advancement."

GOVERNMENT AND OTHER PROCUREMENT POLICIES

The Company's principal customers are governmental agencies and law
enforcement entities that are subject to budgetary processes and expenditure
constraints. Budgetary allocations for detection equipment are dependent, in
part, upon governmental policies which fluctuate from time to time in response
to political and other factors. A reduction of funding for drug interdiction and
security efforts could materially and adversely affect the Company's business,
financial condition and results of operations.

Moreover, although the Company's sales are not seasonal in nature,
governmental agencies and certain of the Company's other customers expend unused
budgeted funds at the end of their respective fiscal years, causing the
Company's sales to be higher during such periods. Since the Company recognizes
substantially all of the revenue from a sale upon shipment, and since the
recognition of revenue from the sale of relatively few IONSCAN(R)s may
substantially impact the Company's profitability during any period, the impact
of these budgetary considerations on the delivery date of a relatively few units
could significantly affect the Company's quarterly results.

DEPENDENCE ON IONSCAN(R) AND MARKET ACCEPTANCE

The Company's future profitability is substantially dependent on the
Company's ability to successfully market the IONSCAN(R). While the Company
believes that significant markets exist for its IONSCAN(R) technology, there can
be no assurance that such markets will develop as the Company expects or that
the Company will be able to capitalize on such market development. Similarly,
there can be no assurance that any markets that do develop will be sustained.

DEPENDENCE ON NEW PRODUCT DEVELOPMENT; TECHNOLOGICAL ADVANCEMENT

The Company's success is dependent upon its ability to continue to enhance
the IONSCAN(R) and to develop and introduce in a timely manner new IONSCAN(R)
products that incorporate technological advances, keep pace with evolving
industry standards and respond to customer requirements. There can be no
assurance that the Company will be successful in developing and marketing
enhancements to the IONSCAN(R) or new IONSCAN(R) products on a timely basis or
that any new or enhanced IONSCAN(R) products will adequately address the
changing needs or preferences of the marketplace. If the Company is unable to
develop and introduce new products or enhancements in a timely manner in
response to changing market conditions or customer requirements, the Company's
business and operating results would be materially adversely affected.

In addition, from time to time the Company or its present or potential
competitors may announce new products, capabilities or technologies that have
the potential to replace or shorten the life spans of the Company's existing
products. Announcements of currently planned or other new products may cause
customers to delay their purchasing decisions in anticipation of such products,
as occurred in late 1994 when the Company introduced the Model 400 IONSCAN(R).
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations." Such delays could have a material adverse effect on the Company's
business, results of operations and financial condition.

LACK OF PROPRIETARY TECHNOLOGY

The Company believes that its implementation of IMS technology in the
IONSCAN(R) is proprietary to the Company. The Company has an exclusive license
from the Canadian government for certain technology used in the IONSCAN(R). See
"Business -- Patents, Trademarks and Proprietary Rights." In addition, the
Company has a number of patents covering certain aspects of the IONSCAN(R).
However, the basic IMS technology is not proprietary and is available in the
public domain. Accordingly, present and potential competitors could use such
technology to duplicate the performance of the IONSCAN(R). However, the

9
<PAGE> 11

Company believes that such competitors could not readily replicate the
IONSCAN(R)'s performance and that any attempt to do so would require substantial
time and resources.

COMPETITION

The Company competes with other entities, a number of which have
significantly greater financial, marketing and other resources than the Company.
In particular, the Company competes for governmental expenditures with equipment
manufacturers utilizing other types of detection technologies, including
CATSCAN, enhanced X-ray and quadropole resonance, as well as with manufacturers
of other IMS equipment and manufacturers using other trace particle detection
technologies, such as gas chromatography and chemoluminescence. As a result of
recent governmental initiatives, the Company anticipates that additional
technologies, including improved IMS technologies, will be developed and that
new competitors will enter the Company's markets. See "Dependence on and Effect
of Governmental Regulation." While the Company believes that it competes
effectively in its principal markets, there can be no assurance that the Company
will maintain its competitive position.

NONCOMPLIANCE UNDER CREDIT FACILITY

The Company's principal subsidiary, Barringer Research Ltd. ("BRL"), is a
party to a credit facility (the "Facility") with the Toronto-Dominion Bank (the
"Bank") which the Company intends to repay in full with a portion of the net
proceeds of the Offering. See "Use of Proceeds." From time to time, BRL has not
been in compliance with the terms of the Facility. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

RETENTION OF AND DEPENDENCE ON KEY PERSONNEL

The Company's success will depend, in part, on its ability to retain the
services of its key personnel, including management and scientific employees,
who are and will continue to be instrumental in the development and management
of the Company's business. Although the Company has entered into an employment
agreement with its Chief Executive Officer and expects to enter into employment
agreements with certain of its other senior executives, the loss of the services
of one or more of the Company's key employees could have a material adverse
effect on the Company.

WARRANTY CLAIMS

The Company generally provides a one-year parts and labor warranty on each
IONSCAN(R). Although the Company has not experienced significant warranty
claims, there can be no assurance that such claims will not increase as the
Company's sales increase. A material increase in warranty claims could have a
material adverse effect on the Company's business, results of operations and
financial condition.

POTENTIAL PRODUCT LIABILITY INSURANCE LIMITS

The Company currently maintains product liability insurance in the amount
of $5 million per occurrence. The Company's insurance policy covers certain
claims and the cost of legal fees involved in the defense of such claims, which
are either covered under the policy or alleged in such a manner so as to invoke
the insurer's duty to defend the Company. No significant product liability
claims have been asserted or, to the knowledge of the Company's management,
threatened against the Company to date. The Company believes that, as the
Company distributes more products into the marketplace and expands its product
lines, the Company's exposure to potential product liability claims and
litigation arising from injuries and other damages allegedly caused by the
improper functioning or design of its IONSCAN(R) products will occur and may
increase. There can be no assurance that the Company's current level of
insurance will be sufficient to protect the business and assets of the Company
from all claims, nor can any assurance be given that the Company will be able to
maintain the existing coverage or additional coverage at commercially reasonable
rates. To the extent product liability losses are beyond the limits or scope of
the Company's insurance coverage, the Company could experience a materially
adverse effect on its business, results of operations and financial condition.

10
<PAGE> 12

CURRENCY FLUCTUATIONS

A portion of the Company's revenues and expenses are denominated in foreign
currencies. As a result, the Company is exposed to a certain degree of exchange
rate risk. The Company currently does not hedge its foreign exchange exposure.
To date, the Company has not experienced any material loss as a result of
currency fluctuations. However, there can be no assurance that the Company will
not experience material losses in the future as a result of currency
fluctuations.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, 4,756,474 shares of Common Stock will be
outstanding (4,943,974 shares, assuming exercise of the Underwriters'
over-allotment option). Up to 468,750 additional shares of Common Stock (515,625
shares, assuming exercise of the Underwriters' overallotment option) will be
issuable upon the exercise of the Warrants offered hereby and the Underwriter's
Warrants. 623,164 of the shares that will be outstanding upon consummation of
the Offering are held by officers, directors and other affiliates of the
Company, all of which are freely tradeable, subject to the lock-up described
below. An additional 1,025,292 shares of Common Stock are issuable to such
officers, directors and other affiliates upon the conversion or exercise of
outstanding securities, including stock options. The Company recently registered
for resale 967,042 shares of Common Stock held by or issuable to officers,
directors and other affiliates of the Company upon the exercise or conversion of
outstanding securities which had previously been restricted. The Company also
intends, in the near future, to register for resale an additional 414,500
restricted shares of Common Stock issuable upon exercise of options previously
granted to officers and directors. Thereafter, all 1,381,542 of such shares will
be generally available for sale in the open market by the holders thereof.

The Company can not predict the effect, if any, that sales of additional
shares of Common Stock or the availability of shares for future sale will have
on the market price of the Common Stock or the Warrants. Sale in the public
market of substantial amounts of Common Stock (including shares issued upon the
exercise or conversion of outstanding securities), or the perception that such
sales could occur, could adversely affect prevailing market prices for the
Common Stock or the Warrants. Such sales also may make it more difficult for the
Company to sell equity securities or equity-related securities in the future at
a time and price that the Company deems appropriate. It is expected that the
officers and directors of the Company, who hold an aggregate of 681,934 shares
of Common Stock (including shares issuable upon the exercise or conversion of
outstanding securities), will agree with the Underwriters not to offer or sell,
directly or indirectly, any securities of the Company in the public market for a
period of 180 days after the date of this Prospectus, subject to certain
exceptions, without the prior written consent of Janney Montgomery Scott Inc.
See "Description of Capital Stock -- Shares Eligible For Future Sale" and
"Underwriting."

VOLATILITY OF COMMON STOCK PRICE

Prior to the Offering, there have been significant fluctuations in the
trading price of the Common Stock. No assurance can be given that such
volatility will not continue following the completion of the Offering. See
"Price Range of Common Stock."

DETERMINATION OF WARRANT EXERCISE PRICE

The exercise price of the Warrants has been set at a premium to the
existing market price of the Common Stock and bears no relationship to any
objective criteria of future value and, accordingly, should in no event be
regarded as an indication of any future market price of the Securities offered
hereby.

ABSENCE OF TRADING MARKET FOR THE WARRANTS

There currently is no trading market for the Warrants. Although the Company
has applied for listing of the Warrants on the NASDAQ NMS, there can be no
assurance that an active market will develop for the Warrants or, if developed,
that it will be maintained. The trading price for the Warrants is expected to be
directly related to the market price for the Common Stock. The market price of
the Common Stock and thus the price for the Warrants are likely to be subject to
significant fluctuation in response to

11
<PAGE> 13

variations in quarterly results of operations, general trends in the market
place and other factors, many of which are not within the Company's control.

UNDERWRITER'S WARRANTS

In connection with the Offering, the Company has agreed to sell to Janney
Montgomery Scott Inc., the representative of the Underwriters (the
"Representative"), the Underwriter's Warrants pursuant to which the
Representative will have the right to purchase from the Company 125,000 shares
of Common Stock and 125,000 Warrants. The Underwriter's Warrants are exercisable
with respect to the Common Stock for a period of four years commencing one year
after the date of this Prospectus at an exercise price equal to 115% of the
initial offering price of the Common Stock and with respect to the Warrants
underlying the Underwriter's Warrants for a period of two years following such
one year period at an exercise price equal to 115% of the initial offering price
of the Common Stock. See "Underwriting." The Underwriter's Warrants, and the
Warrants issuable upon exercise thereof, afford the holders thereof the
opportunity, at nominal cost, to profit from a rise in the market price of the
Common Stock, which may adversely affect the terms upon which the Company could
issue additional shares of Common Stock during the exercise period of the
Underwriter's Warrants. Additionally, the holders of the Underwriter's Warrants,
and the Warrants issuable upon exercise thereof, will most likely exercise the
Underwriter's Warrants and the Warrants issuable upon exercise thereof at a time
when the Company could obtain capital from other sources on terms more favorable
than those contained in the Underwriter's Warrants.

CERTAIN CHARTER PROVISIONS

The Company currently has 7,000,000 shares of Common Stock authorized for
issuance. Upon completion of the Offering, the Company will have 4,756,474
shares of Common Stock outstanding (4,943,974 shares, assuming full exercise of
the Underwriters' over-allotment option). An additional 1,877,994 shares of
Common Stock (1,924,869 shares, assuming full exercise of the Underwriters'
over-allotment option) will be reserved for issuance upon the conversion or
exercise of outstanding securities of the Company. The Company intends to seek
stockholder approval at its next annual meeting of stockholders to increase the
number of shares of Common Stock the Company is authorized to issue. In the
event that the authorized number of shares of Common Stock is not increased, the
Company's ability to issue additional shares of capital stock, including in
connection with acquisitions and subsequent financings, would be significantly
restricted.

The Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), contains provisions which require the favorable vote of the
holders of not less than 80% of the outstanding shares of Common Stock for the
approval of any merger, consolidation or other combination with, or sale, lease
or exchange of all or substantially all of the assets of the Company to, another
entity holding more than 10% of the Company's outstanding voting equity
securities or any affiliate of such entity. These provisions could discourage
potential acquisition proposals, delay or prevent a change in control of the
Company and limit the price that certain investors might be willing to pay in
the future for shares of the Common Stock.

The Board of Directors of the Company is empowered to issue shares of
preferred stock without stockholder action. The existence of this "blank check"
preferred stock could render more difficult or discourage an attempt to obtain
control of the Company by means of a tender offer, merger, proxy contest or
otherwise and may adversely affect the prevailing market price of the Common
Stock. The Company currently has no plans to issue additional shares of
preferred stock. In addition, Section 203 of the Delaware General Corporation
Law prohibits certain persons from engaging in business combinations with the
Company. See "Description of Capital Stock."

12
<PAGE> 14

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Securities offered
hereby are estimated to be approximately $10,269,000 ($11,880,000 if the
Underwriter's over-allotment option is exercised in full) assuming an initial
offering price of $9.50 per Share and $.05 per Warrant after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by the Company. Such proceeds are intended to be applied approximately as
follows:

- $4,000,000 for product development, including research and
development, tooling and drawing expenses and product testing (see
"Business -- Strategy");

- up to $1,000,000 for repayment of the Company's 6% Subordinated
Convertible Debentures due 1997 (the "Debentures"), to the extent not
converted as described below;

- up to $700,000 for repayment of the outstanding indebtedness under
the Facility (see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources");

- up to $700,000 for repayment of BRL's loan (the "ODC Loan") from the
Ontario Development Corporation ("ODC") (see "Management's Discussion
and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources");

- $300,000 for expansion of the Company's manufacturing and assembling
capabilities (see "Business -- Manufacturing and Assembly"); and

- the balance for general corporate purposes, including additions to
working capital and inventory.

The Company issued $1,000,000 of the Debentures in July 1996. The
Debentures bear interest at the rate of 6% per annum, are presently convertible
into shares of Common Stock at a conversion rate of $2.75, and mature 30 days
after the consummation of the Offering unless converted prior thereto. Because
the conversion rate of the Debentures is substantially lower than the current
per share price of the Common Stock, the Company anticipates that substantially
all of the Debentures will be converted into shares of Common Stock. Any
Debentures not so converted will be repaid with a portion of the net proceeds of
the Offering. $300,000 of the net proceeds of the Debentures were utilized to
repay the Company's 12 1/2% convertible subordinated debentures due 1996 (the
"Old Debentures"), and the remaining proceeds were added to working capital. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

The Facility bears interest at a variable rate (8% at June 30, 1996) equal
to 1 1/2% above the Bank's prime lending rate, although from time to time
certain amounts thereunder have borne interest at a default rate of 21%. See
Note 5 to Consolidated Financial Statements. Borrowings under the Facility are
payable upon demand and have been used for working capital, including
manufacturing and inventory requirements.

The ODC Loan bears interest at a variable rate set quarterly by ODC, which
was 10% at June 30, 1996, and matures on April 30, 1997, subject to renewal.
Borrowings under the ODC Loan have been used to support Canadian export, sales
and related production and receivables financing.

A portion of the net proceeds of the Offering may be used to make future
strategic acquisitions or to invest in joint ventures, although currently the
Company has no agreement, understanding or commitment with respect to any
acquisition, investment or joint venture.

Pending the applications described above, the Company will invest the
proceeds principally in short-term bank certificates of deposit, highly rated
short-term debt securities, United States governmental obligations, money market
instruments or other highly rated interest-bearing investments with maturities
of less than one year.

13
<PAGE> 15

PRICE RANGE OF COMMON STOCK

The Common Stock is traded in the over-the-counter market and quoted on The
NASDAQ SmallCap Market under the symbol BARR. The Company has applied to include
the Common Stock and the Warrants in The NASDAQ NMS. The following table sets
forth, for each period indicated, the high and low bid prices for the Common
Stock as reported on The NASDAQ SmallCap Market after giving effect to the
one-for-four reverse stock split effected September 25, 1995. Such prices
reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
------ -----
<S> <C> <C>
1994
First Quarter........................................... $11.24 $9.00
Second Quarter.......................................... 9.24 6.00
Third Quarter........................................... 6.76 4.00
Fourth Quarter.......................................... 4.52 2.00
1995
First Quarter........................................... $ 6.88 $1.25
Second Quarter.......................................... 5.00 2.00
Third Quarter........................................... 4.25 2.25
Fourth Quarter.......................................... 3.25 0.50
1996
First Quarter........................................... $ 0.56 $0.31
Second Quarter.......................................... 4.19 0.44
Third Quarter........................................... 13.88 2.88
Fourth Quarter (through October 23, 1996)............... 10.63 7.19
</TABLE>

On October 23, 1996, the last reported sale price of the Common Stock was
$10.63 per share. As of August 26, 1996, the Company had approximately 965
stockholders of record.

DIVIDEND POLICY

Since inception, the Company has not paid cash dividends on its Common
Stock. The Company currently intends to retain future earnings to support its
growth strategy and does not anticipate paying dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various factors,
including the Company's financial condition, results of operations, current and
anticipated cash needs and plans for expansion. The Company is prohibited from
paying cash dividends on the Common Stock unless full cumulative dividends have
been paid or set aside for payment on the Company's Class A Convertible
Preferred Stock and Class B Convertible Preferred Stock at an annual rate of
$.16 per share, which dividends, at the option of the Company, are payable in
cash or shares of Common Stock. See "Description of Capital Stock." In addition,
the ability of the Company to pay dividends has been limited because BRL is
restricted from providing cash to the Company by the terms of the Facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." The Company's ability to pay
dividends on its Common Stock may be further limited in the future by other
legal or contractual restrictions placed on the Company and on the ability of
its subsidiaries to provide cash to the Company.

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the short-term debt and the capitalization
of the Company as of June 30, 1996 and as adjusted to give effect to the sale by
the Company of the 1,250,000 shares of Common Stock and 1,250,000 Warrants
offered hereby (assuming an initial offering price of $9.50 per Share and $.05
per Warrant, after deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by the Company) and the
application by the Company of the net proceeds therefrom. See "Use of Proceeds."
This table should be read in conjunction with the Consolidated Financial
Statements, including the Notes thereto, included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------
ACTUAL AS ADJUSTED(1)
------------ --------------
<S> <C> <C>
Short-term debt(2).............................................. $ 1,531,000 $ 300,000
============ ============
Long-term debt.................................................. -- --
Stockholders' equity(3):
Convertible Preferred Stock, $1.25 per value, 1,000,000 shares
authorized, none outstanding............................... -- --
Preferred Stock, $2.00 par value, 4,000,000 shares authorized
270,000 shares designated Class A Convertible Preferred
Stock,
74,000 shares outstanding less discount of $57,000....... $ 91,000 $ 91,000
730,000 shares designated as Class B Convertible Preferred
Stock, 233,000 shares outstanding........................ 465,000 465,000
Common Stock, $.01 par value, 7,000,000 shares authorized,
3,498,000 shares issued and outstanding, 4,748,000 shares,
as adjusted(4)............................................. 35,000 48,000
Additional paid-in-capital...................................... 17,765,000 28,021,000
Accumulated deficit............................................. (16,003,000) (16,003,000)
Foreign currency translation.................................... (460,000) (460,000)
Less: Common Stock in treasury at cost, 31,000 shares......... (13,000) (13,000)
------------ ------------
Total stockholders' equity...................................... 1,880,000 12,149,000
------------ ------------
Total capitalization............................................ $ 1,880,000 $ 12,149,000
============ ============
</TABLE>

- ---------------

(1) Assumes that all of the outstanding Debentures are repaid with a portion of
the net proceeds of the Offering and are not converted into shares of Common
Stock. See "Use of Proceeds."

(2) Short-term debt at June 30, 1996 included the Old Debentures. The Old
Debentures were repaid on July 15, 1996 with a portion of the net proceeds
from the sale of the Debentures.

(3) See "Description of Capital Stock" for a description of the relative rights
of the Company's Preferred Stock and Common Stock.

(4) Excludes an aggregate of 2,112,369 Reserved Shares.

15
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected consolidated financial data presented below for the years
ended December 31, 1991 through 1995 have been derived from financial statements
which have been audited by BDO Seidman, LLP, independent certified public
accountants. The selected consolidated financial data presented below for the
six-month periods ended June 30, 1995 and 1996 have been derived from unaudited
financial statements which, in the opinion of management, reflect all
adjustments, consisting only of normal recurring items, necessary for a fair
presentation of such data. Results for the six months ended June 30, 1996 are
not necessarily indicative of the results that can be expected for any other
interim period or for the year ended December 31, 1996 as a whole. The selected
consolidated financial data appearing below should be read in conjunction with
the Consolidated Financial Statements and the Notes thereto included elsewhere
in this Prospectus and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained herein.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------- ---------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues from operations................... $ 1,963 $ 2,838 $7,770 $ 5,514 $ 6,374 $3,110 $5,012
Cost of sales.............................. 1,703 2,211 3,930 4,269 3,804 1,892 2,647
------- ------- ------ ------- ------- ------ ------
Gross profit............................... 260 627 3,840 1,245 2,570 1,218 2,365
------- ------- ------ ------- ------- ------ ------
Selling, general and administrative
expenses................................ 2,733 2,180 3,117 3,352 3,305 1,300 1,641
Unfunded research and development.......... 632 161 182 362 151 104 57
------- ------- ------ ------- ------- ------ ------
Operating expenses......................... 3,365 2,341 3,299 3,714 3,456 1,404 1,698
------- ------- ------ ------- ------- ------ ------
Operating income (loss) from operations.... (3,105) (1,714) 541 (2,469) (886) (186) 667
Other expense, net......................... (219) (49) (101) (89) (292) (170) (103)
Income tax benefit (provision)............. -- -- 153 (75) -- -- --
------- ------- ------ ------- ------- ------ ------
Income (loss) from continuing operations... (3,324) (1,763) 593 (2,633) (1,178) (356) 564
Income (loss) from operation held for
sale.................................... (339) (44) 2 68 351 55 --
------- ------- ------ ------- ------- ------ ------
Net income (loss).......................... (3,663) (1,809) 595 (2,565) (827) (301) 564
Preferred stock dividends.................. (103) (160) (114) (108) (82) (51) (24)
------- ------- ------ ------- ------- ------ ------
Net income (loss) attributable to common
stockholders............................ (3,766) (1,967) 481 (2,673) (909) (352) 540
======= ======= ====== ======= ======= ====== ======
Income (loss) per common share from
continuing operations(2)................ (1.84) (0.90) 0.20 (0.97) (0.39) (0.13) 0.15
Net income (loss) per common share(2):
Primary................................. (2.02) (0.92) 0.20 (0.95) (0.28) (0.11) 0.16
Fully-diluted........................... -- -- -- -- -- -- 0.15
Weighted average common shares
outstanding(2):
Primary................................. 1,862 2,135 2,570 2,827 3,283 3,060 3,483
Fully-diluted........................... -- -- -- -- -- -- 3,854
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------
1995 1995 1996
------------ ------ ------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 370 $1,139 $ 940
Current assets......................................... 3,672 5,532 4,828
Total assets........................................... 4,735 6,278 5,881
Current liabilities.................................... 3,302 4,393 3,888
Long-term liabilities.................................. 108 -- 113
Stockholders' equity................................... 1,325 1,885 1,880
</TABLE>

- ---------------

(1) Amounts for all periods ending prior to December 31, 1995 reflect Labco as a
discontinued operation. The Company sold a portion of its equity interest in
Labco in December 1995. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Overview."

(2) Adjusted to give effect to the one-for-four reverse split of the Common
Stock effected on September 25, 1995.

16
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with,
and is qualified in its entirety by, the Company's Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this Prospectus.
Historical results are not necessarily indicative of trends in operating results
for any future period.

OVERVIEW

Since 1990, the Company has principally engaged in the design, development,
manufacture and sale of the IONSCAN(R). To a lesser extent, the Company also
manufactures specialty instruments and engages in contract research and
development activities for industrial companies and various governmental
agencies. Prior to 1990, the Company engaged primarily in airborne mineral
exploration utilizing trace particle collection techniques and analysis, and
funded research and development activities, consisting of contracts and grants
received by the Company for research and development on behalf of third parties.
In 1990, the Company decided to use the trace particle expertise gained in its
airborne exploration business and research and development activities to pursue
the more attractive detection instrument market. Accordingly, the Company ceased
its airborne exploration business and began the development of the IONSCAN(R).
For the year ended December 31, 1995 and the six months ended June 30, 1996,
approximately 82% and 88%, respectively, of the Company's consolidated revenues
were derived from the sale and servicing of IONSCAN(R)s and other speciality
instruments.

The Company sells IONSCAN(R)s in two primary markets, explosives detection
and drug interdiction. The Company sold its first IONSCAN(R) in 1990 and had
sold a total of approximately 300 units as of June 30, 1996. Historically, the
Company sold a majority of its units for drug interdiction applications.
However, during 1996 the Company's sales have been divided almost evenly between
the explosives detection market and the drug interdiction market. Management
expects that the explosives detection market will account for an increasingly
significant portion of the Company's future growth.

The Company sells IONSCAN(R)s for between $50,000 and $95,000 per unit,
depending principally on the configuration of the unit and the purchaser's
location. While substantially all of the Company's revenues are denominated in
U.S. dollars, the Company operates in several foreign countries, including
Canada, the United Kingdom and France, and in certain instances, the Company
sells the IONSCAN(R) in other denominations, particularly British pounds and
French francs. In addition, the Company conducts operations in Canada and, as a
result, certain of the Company's costs are incurred in Canadian dollars. To
date, the Company has not experienced significant losses as a result of foreign
currency fluctuations. The Company currently does not hedge its foreign currency
exposure.

The Company manufactures to a sales forecast in order to have inventory
available to meet anticipated demand promptly and, accordingly, does not have a
significant backlog. Management's sales forecast is determined by an analysis of
a number of factors, including, among other things, the customer's need, the
availability of budgeted funds, the status of equipment demonstrations, the
status of any required approvals and the complexity of the customer's
procurement process. The Company also considers the effect of competition in
obtaining an order. The Company has publicly announced its intention to double
its production in the second half of 1996 in order to accommodate anticipated
demand. There can be no assurance that the Company will receive orders for all
of the units to be produced and, if such orders are not received, the Company's
liquidity and results of operations could be materially and adversely affected.
The Company believes that its existing manufacturing facilities, which the
Company intends to supplement through the use of a portion of the proceeds from
the Offering, will be sufficient for the anticipated growth in orders for the
IONSCAN(R) in the foreseeable future.

Through the period ended June 30, 1996, the Company reported two segments
for financial statement purposes: (i) specialty instruments and (ii) funded
research and development. Because of the rapid growth in sales of IONSCAN(R)s
through June 1996, the funded research and development segment is no longer

17
<PAGE> 19

significant to the Company's consolidated revenues. Accordingly, effective June
30, 1996, the Company ceased reporting segment information.

Approximately 72% and 82% of the Company's revenues for the year ended
December 31, 1995 and for the six months ended June 30, 1996, respectively, were
derived from non-United States sources. Approximately 30% of revenues in 1995
were derived from customers in Canada.

The Company recognizes revenues from the sale of IONSCAN(R)s upon shipment.
Accordingly, changes in delivery dates for relatively few IONSCAN(R)s from one
quarter to another may have a significant impact on the Company's quarterly
results.

Prior to December 1995, the Company controlled Barringer Laboratories, Inc.
("Labco"), a publicly traded company that provides comprehensive
laboratory-based analytical and consulting services in the United States and
Mexico, including environmental monitoring and geochemical analysis for the
hydrocarbon and mineral exploration industries. In order to focus its resources
on its core business and to increase working capital, in December 1995 the
Company entered into a Stock Purchase Agreement with Labco (the "Stock Purchase
Agreement") pursuant to which the Company sold back to Labco 647,238 shares of
Labco's common stock for an aggregate purchase price of $809,000. The purchase
price consisted of the cancellation of all inter-company obligations and
$300,000 in cash. A portion of the net cash proceeds from such sale were
contributed to BRL pursuant to an agreement with the Bank. After giving effect
to the sale, the Company continued to own 437,475 shares of Labco's common
stock. However, under the terms of the Stock Purchase Agreement, Labco retained
an additional 88,260 shares of Labco common stock owned by the Company (the
"Retained Shares"). The Company is only entitled to the return of the Retained
Shares if Labco meets certain pre-tax earnings goals for 1996. The Company also
agreed to terminate all voting arrangements allowing it to vote shares of Labco
common stock not owned by it and agreed for a period of 24 months not to enter
into any such voting arrangements. Labco had the right until January 2, 1997 to
purchase the Company's remaining ownership interest in Labco under certain
circumstances. In addition, the Company agreed to certain restrictions on the
transferability of its remaining Labco stock until January 2, 1997. As a result
of the transactions contemplated by the Stock Purchase Agreement, the Company
reclassified its financial statements, where appropriate, to reflect its prior
interest in Labco as a discontinued operation and commenced using the equity
method of accounting for its remaining interest. See Note 2 of the Notes to
Consolidated Financial Statements.

In October 1996, the Company and Labco entered into a Termination Agreement
(the "Termination Agreement") pursuant to which Labco agreed to waive its right
of first refusal and to terminate the restrictions on the transfer of the
Company's remaining Labco shares. The Company agreed that, for a period of three
months from the date of the Termination Agreement, it would sell such shares at
a price of at least $1.6875 per share (the "Target Price") in a distribution in
which it would not knowingly sell more than 75,000 shares to any one purchaser
or group of related purchasers. Under the Termination Agreement, for such three-
month period, the Company must sell its Labco shares as provided above if it
receives an offer to acquire such shares at a price per share at least equal to
the Target Price. The restrictions described above also apply to any shares of
Labco common stock issuable to the Company upon the exercise of certain warrants
held by the Company. Labco has registered the Company's Labco shares for resale
pursuant to the Securities Act to facilitate such sales.

In the Termination Agreement, the Company agreed to surrender to Labco the
Retained Shares and to terminate all remaining inter-company arrangements. In
addition, upon the disposition by the Company of at least 250,000 of its shares
of Labco common stock, Stanley S. Binder and John J. Harte will resign their
positions with Labco.

18
<PAGE> 20

The following table presents certain income statement items expressed as a
percentage of total revenue for the fiscal years ended December 31, 1993, 1994,
and 1995 and the six months ended June 30, 1995 and 1996.

PERCENTAGE OF TOTAL REVENUE

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues from operations......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................... 50.6 77.4 59.7 60.8 52.8
Gross profit..................................... 49.4 22.6 40.3 39.2 47.2
Selling, general and administrative expenses..... 40.1 60.8 51.9 41.8 32.7
Unfunded research and development................ 2.3 6.6 2.4 3.3 1.1
Operating income (loss).......................... 7.0 (44.8) (13.9) (6.0) 13.3
Other expense, net............................... (1.3) (1.6) (4.6) (5.5) (2.1)
Income tax benefit (provision)................... 2.0 (1.4) -- -- --
Income (loss) from continuing operations......... 7.6 (47.8) (18.5) (11.4) 11.3
Income from operation held for sale.............. * 1.2 5.5 1.8 --
Net Income (loss)................................ 7.7 (46.5) (13.0) (9.7) 11.3
Preferred stock dividends........................ (1.5) (2.0) (1.3) (1.6) (0.5)
Net income (loss) attributable
to common stockholders........................ 6.2% (48.5)% (14.3)% (11.3)% 10.8%
</TABLE>

- ---------------
* less than 0.1%
(1) Columns may not foot due to rounding.

Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995

Revenues from operations of the Company consist of (a) net sales of its
IONSCAN(R) drug and explosives detection equipment, related accessories and
consumable supplies, maintenance, training and billable repairs; (b) net sales
of other instruments; and (c) revenues derived from funded research and
development grants and contracts. Revenues from operations increased by
$1,902,000, or 61.2%, in the six months ended June 30, 1996 compared to the same
period in 1995. Net sales of the IONSCAN(R) and related products increased by
approximately $1,676,000, or 77.1%, in the six months ended June 30, 1996
compared to the same period in 1995, due to an increase in the number of units
sold of approximately 118%. The increase in IONSCAN(R) sales was due to
increased sales of the Model 400 which was introduced in the first quarter of
1995 in various configurations designed to suit customers' needs. Management
believes the increased sales resulted from an expanding market, coupled with the
Model 400 having a lower selling price than the predecessor Model 350, and being
smaller, lighter and containing more features. Net sales of other instruments
increased by approximately $346,000, or 155%, in the six months ended June 30,
1996 compared to the same period in 1995, principally due to work performed on a
heavy water analyzer contract, which was awarded to the Company in mid-1995 and
completed in the first half of 1996. In addition, net sales benefited from the
sale of several other instruments. The markets for heavy water analyzers and
other instruments are limited, and therefore management cannot predict whether
the Company will receive any future orders. Revenues derived from funded
research and development decreased by approximately $145,000, or 21.2%, in the
six months ended June 30, 1996 compared to the same period in 1995. The reduced
revenues are attributable to reduced work performed under the Company's contract
with the Emergencies Science Division, Environment Canada to design and build an
airborne laser-fluorosensor system, a substantial portion of which was completed
in 1995.

Gross profit as a percentage of sales for the six months ended June 30,
1996 increased to 47.2% from 39.2% in the same period last year. The improvement
was primarily attributable to higher margins on special

19
<PAGE> 21

orders and international sales, coupled with larger, more efficient production
runs of the IONSCAN(R) and related products. The sale at higher than expected
prices of several Model 350 units during the first six months of 1996, the
carrying value of which had been reduced in 1995, also contributed to the
improvement. Improved gross profits from funded research and development
activities also contributed to the overall improvement.

Selling, general and administrative expenses, consisting primarily of
salaries and related fringe benefits, occupancy costs, professional fees and
travel expenses, increased by approximately $341,000, or 26.2%, for the six
months ended June 30, 1996 as compared to the same period in 1995. However, in
the 1995 period the Company recognized an expense decrease of $152,000
attributable to a negotiated reduction in professional fees. But for such
reduction, selling, general and administrative expenses in the 1996 period would
have increased by $189,000. As a percentage of revenues, selling, general and
administrative expenses decreased to 32.7% for the first six months of 1996 from
41.8% for the same period in 1995. The decrease as a percentage of revenues was
primarily attributable to spreading costs over increased revenues. Selling
expenses increased by $256,000, or 34.3%, for the six-month period ended June
30, 1996 compared to the same period in 1995. Most of the increase was
attributable to expenses associated with the Company's French and United Kingdom
offices being open for a six-month period in 1996 at full staffing levels. The
balance of the increase was attributable to increased levels of sales activity
in Canada and the United States and marketing expenses associated with the
DrugAlert(TM) product (a drug testing kit designed for use by individuals),
which marketing expenses were substantially eliminated as of July 1, 1996.

In the first six months of 1996, unfunded research and development expenses
consisting primarily of salaries and related benefits and occupancy costs for
product and application development applied to IONSCAN(R) technology decreased
by approximately $47,000, or 45.2%, compared to the first six months of 1995.
The level of unfunded research and development engaged in by the Company at any
time is primarily a function of the resources, both financial and personnel,
that are available at the time.

Interest expense increased by approximately $8,000 in the six months ended
June 30, 1996, or 6.6%, over the same period in 1995. The increase is the result
of higher levels of borrowing, at higher interest rates.

Equity in earnings of Labco represents the Company's share of the earnings
and losses of Labco, in which the Company has a 26% ownership interest. Prior to
December 31, 1995, the Company had a controlling interest in Labco, but since
the first quarter of 1995, the Company has presented Labco as an operation held
for sale. Fluctuations in earnings and losses are dependent upon the performance
of Labco. The Company's share of Labco's net income for the six months ended
June 30, 1996 was $20,000, as compared to $55,000 for the same period in 1995
(where it is shown under the caption "Income from operation held for sale").

Other income, net of expense, was $7,000 for the six months ended June 30,
1996 as compared to other expense, net of income, of $48,000 for the same period
last year. The increase was primarily due to gains of approximately $42,000
recognized during the first six months of 1996 on trading securities held for
pension funding purposes.

1995 Compared to 1994

Sales of all instruments increased by $34,000, or 0.1%, in 1995 as compared
to 1994. Sales of IONSCAN(R) instruments and related products decreased by
approximately $200,000, or 3.9%. The decrease was due, in part, to the lower
selling price of the new Model 400 IONSCAN(R), which was introduced in the first
quarter of 1995. This reduction in selling price, coupled with other
improvements of the new model, resulted in approximately 36.6% more unit sales.
Sales of instruments other than IONSCAN(R) products increased in 1995 by
approximately $100,000, or 23%, principally due to the award in 1995 of the
contract to build four heavy water analyzers for use at a nuclear facility in
Asia, which was completed in mid-1996. The introduction of the Model 400
resulted in reduced sales of the Model 350. As a result, the Company reduced the
carrying value of the Model 350s remaining in inventory.

Revenues of the research and development business increased by
approximately $754,000, or 253.0%, in 1995 as compared to 1994. The improved
sales are attributable to work performed in 1995 under the

20
<PAGE> 22

Company's contract with the Emergencies Science Division, Environment Canada to
design and build an airborne laser-fluorosensor system.

The Company introduced and made a limited distribution of DrugAlert(TM) in
1995. Sales of such product were not significant.

Gross profit as a percentage of sales for the year ended December 31, 1995
increased to 40.3% from 22.6% in 1994. The gross profit as a percentage of sales
for the research and development business improved to a negative 14.2% in 1995
from a negative 44.6% in 1994. The improvement was due to higher volume which
absorbed a greater portion of the fixed overhead. The gross profit as a
percentage of sales for the instruments business increased to 53.1% in 1995 from
26.4% in 1994. The 1995 gross profit was impacted by the write down of the
carrying value of the Model 350 inventory which aggregated approximately
$450,000, approximately $160,000 of which related to excess spare parts
inventory and the balance to finished goods. In 1994, the Company took an
$800,000 charge against its Model 350 inventory. The consumer products business
had negative gross profit in 1995 due primarily to the expensing of tooling,
software and other development costs.

Selling, general and administrative expenses in 1995 decreased by
approximately $47,000, or 1.4%, over 1994. As a percentage of revenues, selling,
general and administrative expenses decreased to 51.9% for 1995 from 60.8% in
1994. The decrease as a percentage of revenues was primarily attributable to
such costs being spread over a higher revenue base. Selling expenses increased
by $759,000, or 48.3%, in 1995. The increase was primarily attributable to the
expenses associated with the Company's Paris, France and London, England offices
being open for a full year and marketing expenses associated with the
DrugAlert(TM) product. General and administrative expenses decreased by
approximately $806,000 in 1995, or 45.3%, over 1994. This reduction was
attributable primarily to the recovery of $147,000 relating to the 1993
conversion of the Canadian pension plan from a defined benefit plan to a money
purchase plan, a reduction in accounts payable of $226,000 relating to a
settlement of professional fees and the effect of staff and expense reductions
implemented in late 1994.

Unfunded research and development in 1995 decreased by approximately
$211,000, or 58.3%, over 1994. The 1994 level was attributable to the completion
of the development of the Company's new Model 400.

Interest expense increased by approximately $38,000 in 1995, or 18.8%, over
1994 levels. The increase is the result of higher levels of borrowing, at higher
interest rates.

Other expense, net of income, in 1995, was approximately $52,000 as
compared to other income, net of expense, in 1994 of approximately $113,000. The
difference of $165,000 was attributable primarily to the changes in exchange
rates which generated a gain of $135,000 in 1994 compared to a loss of $79,000
in 1995.

1994 Compared to 1993

Sales of all instruments for 1994 decreased by $1,545,000, or 22.8%, over
1993. The decrease was attributable to several factors. Management believes that
the pending introduction of the Company's new Model 400 IONSCAN(R) caused a
deferral of purchases until the Model 400 was available. Because of the
announcement of the Model 400, the Company anticipated that its remaining Model
350s would be sold at lower prices over a longer period of time than previously
expected. Accordingly, it offered reduced prices to certain customers as
inducements to secure more timely purchase commitments and reduced prices on
outstanding quotations in order to expedite buying decisions.

Revenues of the research and development business decreased by $711,000, or
70.5%, in 1994 compared to 1993, partially as a result of a decrease in
government sponsored research due to budgetary constraints. In addition, the
Company had several proposals outstanding involving potential new applications
of its IONSCAN technology with U.S., Canadian and European governmental
agencies, which resulted in 1995 revenues for the research and development
business being significantly improved from 1994. See "1995 Compared to 1994."

Gross profit for the instrument and research and development businesses as
a percentage of sales for the year ended December 31, 1994 decreased from 49.4%
in 1993 to 22.6% in 1994. The gross profit as a

21
<PAGE> 23

percentage of sales on the research and development business decreased from 6.5%
in 1993 to a negative 44.6% in 1994 and the gross profit as a percentage of
sales on the instruments business decreased from 55.8% in 1993 to 26.4% in 1994.
As a result of the decline in the value of its inventory of Model 350s in 1994,
which resulted from the introduction of the Model 400, the Company provided for
approximately $800,000 in inventory and other charges against the remaining
inventory of Model 350s. This charge reduced 1994 gross profit percentage of the
instruments business by approximately 15.3% from 1993. The remaining decrease in
gross profit percentage was due primarily to volume variances as a result of
cutbacks in planned Model 350 production to meet the anticipated reduction in
sales levels.

Selling, general and administrative expenses in 1994 increased by $235,000,
or 7.5%, over 1993. As a percentage of revenues, selling, general and
administrative expenses increased to 60.8% in 1994 from 40.1% in 1993. The
increase was primarily attributable to such costs being spread over a lower
revenue base. Selling expenses decreased by $274,000 in 1994, or 14.9%, over
1993, as a result of reduced commissions resulting from reduced unit sales
during 1994, offset in part by the expenses incurred in connection with the
opening of the Company's Paris office. General and administrative expenses
increased by $509,000, or 40%, primarily as a result of the impact of the
Canadian pension expense of approximately $100,000 in 1994 against a pension
credit of $206,000 in 1993, which was the result of converting from a defined
benefit plan to a money purchase plan similar to the 401(k) savings plans
available to the Company's U.S. employees. Also, payroll costs increased during
the first three quarters of 1994 in anticipation of increased volume which did
not materialize. Subsequently, significant staff reductions were implemented. In
addition, a reserve against accounts receivable of approximately $110,000 was
established.

Unfunded research and development in 1994, applied to IONSCAN(R)
technology, doubled to $362,000 from 1993 levels. The increase was primarily
attributable to the development of the Company's new Model 400 instrument.

Interest expense increased by $38,000, or 23.2%, in 1994, as a result of
higher average borrowings and rising interest rates.

Other income, net of expense in 1994 was approximately $113,000 as compared
to other income, net of expense, in 1993 of approximately $63,000. The
difference is attributable, in part, to foreign exchange gains realized during
1994. Sales of IONSCAN(R) units are quoted in U.S. dollars, while production
costs are incurred in Canadian dollars.

In 1994, the Company had a net reduction in its Canadian deferred tax
assets of $75,000. In 1993, the Company had a net tax benefit of $153,000,
composed of prior years' assessments by Revenue Canada of $147,000 and a net
recognition of $300,000 in Canadian deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

The Company sustained net losses of $2,565,000 and $827,000 for the years
ended December 31, 1994 and 1995, respectively, and had an accumulated deficit
of $16,003,000 at June 30, 1996. Although the Company generated net income of
$564,000 for the six months ended June 30, 1996, the Company did not generate
net cash flow from operations during such period as a result of the Company's
need for working capital to support higher levels of accounts receivable and
inventory. The Company's history of losses and its failure to generate positive
operating cash flow have resulted in significant cash shortages from time to
time. See "Risk Factors -- History of Losses" and "-- Cash Constraints." The
Company's cash constraints were exacerbated during 1995 in connection with the
introduction of the Company's Model 400 IONSCAN(R), as customers chose to wait
for Model 400s to become available rather than purchase existing Model 350s.

The Company has used the net proceeds of private sales of securities to
fund a portion of its cash flow needs. During 1995, the Company generated net
proceeds of $888,000 from such sales. In July 1996, the Company issued the
Debentures, resulting in net proceeds to the Company of approximately
$1,000,000. The Company used $300,000 of the net proceeds from the sale of the
Debentures to repay the Old Debentures which matured on July 15, 1996. The
remaining net proceeds were added to working capital. The Company intends to use
a portion of the net proceeds of the Offering to repay the Debentures, if
required, and to support

22
<PAGE> 24

its working capital needs. See "Use of Proceeds." The Company believes that the
net proceeds of the Offering will be sufficient to fund its working capital
requirements for at least the next twelve months.

In 1995, the Company also financed its working capital requirements in part
through the sale of a portion of its investment in Labco. See "Overview."

The Company funds a portion of BRL's operations through the Facility and
the ODC Loan, which are used to support Canadian export production, sales and
related receivables financing. At June 30, 1996, BRL's outstanding borrowings
under these facilities were $1,231,000, and $250,000 remained available for
future borrowings thereunder, to the extent qualifying collateral is available
to support such additional borrowings. From time to time BRL's borrowings under
the Facility have exceeded the limits set forth therein. In addition, from time
to time BRL has not been in compliance with one or more of the financial
covenants contained therein. See "Risk Factors -- Noncompliance Under Credit
Facility" and Note 5 to Consolidated Financial Statements. The Company intends
to repay the Facility and the ODC Loan out of the net proceeds of the Offering.
Upon completion of the Offering, the Company intends to seek a new working
capital facility to support its operations, although no assurance can be given
that the Company will obtain a facility or as to the terms thereof. See "Use of
Proceeds."

The Company's capital expenditures relating to its continuing operations
were $120,000, $490,000 and $358,000 for the years ended December 31, 1993, 1994
and 1995, respectively, and $47,000 for the six months ended June 30, 1996. Such
expenditures related primarily to the support of the production of the
IONSCAN(R). During 1995, a portion of such expenditures related to the opening
of the Company's foreign sales offices. Approximately $75,000 of the 1995
expenditures were for development of the DrugAlert product, further development
of which has been suspended. The Company anticipates that total capital
expenditures will be approximately $100,000 for the year ended December 31,
1996, substantially all of which will be used to support production of the
IONSCAN(R). The Company intends to use approximately $300,000 of the net
proceeds of the Offering for expansion of the Company's manufacturing and
assembling capabilities. See "Use of Proceeds."

The Company has substantial tax loss and research and development tax
credit carryforwards to offset future tax liabilities both in Canada and the
United States. However, it is anticipated that the Company will have utilized
substantially all of its Canadian Provincial tax loss and research and
development tax credit carryforwards and, commencing in the third quarter of
1996, may incur Canadian Provincial tax liabilities.

INFLATION

Inflation was not a material factor in either the sales or the operating
expenses of the Company during the periods presented herein.

RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD

Recent pronouncements of the Financial Accounting Standards Board ("FASB"),
which are not required to be adopted at this date, include Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") and SFAS No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"),
which are effective for fiscal years beginning after December 15, 1995. The
Company's accounting policy with respect to Long-Lived Assets is in conformity
with SFAS 121 and the Company does not presently intend to adopt the fair value
based method for accounting for stock compensation plans pursuant to SFAS 123.

UNAUDITED NINE MONTHS RESULTS

For certain information relating to the Company's consolidated results of
operations for the three-month and nine-month periods ended September 30, 1995
and 1996, see "Summary -- Recent Developments."

23
<PAGE> 25

BUSINESS

OVERVIEW

The Company is principally engaged in the design, development, manufacture
and sale of analytical instruments used for the high sensitivity detection of
trace amounts of plastic and other explosives and illegal narcotics. The
Company's principal product, the IONSCAN(R), is a portable, desk-top instrument
that utilizes a proprietary implementation of ion mobility spectrometry ("IMS")
technology to determine the presence or absence of targeted compounds in a
sample. The IONSCAN(R) can detect targeted substances in amounts smaller than
one-billionth of a gram in approximately six seconds. See "IONSCAN(R)
Technology."

IONSCAN(R)s have been sold for explosives detection applications primarily
outside the United States and for drug interdiction and detection deployment
both within the United States and elsewhere. For example, the IONSCAN(R) is used
in foreign airports, on trains and at the Eurotunnel to check for explosives and
by the United States Coast Guard to check ships and cargo in U.S. territorial
waters for illegal narcotics.

The Company believes that the security-related market for the IONSCAN(R) is
growing as a result of governmental actions, particularly in the United States,
which reflect heightened public safety concerns in the wake of an increasing
number of terrorist acts. Recently, Congress appropriated $144,000,000 for the
purchase of enhanced explosives detection equipment for use at certain airports
in the United States, and the Company believes that a portion of such
appropriation will be utilized for the acquisition of trace particle detection
equipment. Governmental agencies in the United States, including the GSA and the
FAA, have accelerated their evaluation or use of enhanced methods to increase
security measures currently employed in United States airports, other
transportation centers and in public buildings. However, no assurance can be
given as to the growth of the security-related market for the IONSCAN(R).

The Company also believes that the market for the IONSCAN(R) for use in
drug applications will increase as a result of recently reported increases in
domestic drug usage, particularly among teenagers. Various governmental
agencies, including the DEA, have purchased IONSCAN(R)s for use in their efforts
to diminish drug trafficking. Prisons and private entities, including public
utilities and drug rehabilitation clinics, also have purchased IONSCAN(R)s to
detect the presence of drugs. No assurance can be given as to the growth of the
drug interdiction and detection market for the IONSCAN(R).

The Company believes that new markets for the IONSCAN(R) can be developed
in other areas, such as security screening of individuals and process control
and quality assurance in certain industrial applications. In addition, when
coupled with certain other existing technologies, such as gas chromatography,
the IONSCAN(R) can be adapted to other uses, including environmental, biological
and chemical testing. Further, the Company intends to expand the potential uses
of the IONSCAN(R) technology by developing a hand held detector.

In addition to the IONSCAN(R), the Company manufactures specialty
instruments and engages in contract research and development activities for
industrial companies and various governmental agencies. For the year ended
December 31, 1995 and the six months ended June 30, 1996, approximately 25% and
23%, respectively, of the Company's consolidated revenues were derived from
these other activities.

The Company was incorporated under the laws of the State of Delaware on
September 7, 1967. The Company's principal executive offices are located at 219
South Street, New Providence, New Jersey 07974, and its telephone number is
(908) 665-8200.

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<PAGE> 26

MARKET OVERVIEW

Explosives Detection

Since the 1970s, metal detection equipment and visual inspection have been
employed throughout the world to detect the presence of weapons. Passengers
boarding airplanes pass through metal detectors while carry-on baggage is
scanned by security personnel utilizing X-ray equipment or is searched by hand.
Similar security measures are used in a variety of public buildings, including
courts, where security concerns are particularly high.

The persistent occurrence of terrorist bombings has demonstrated that
currently deployed security measures are inadequate, particularly for the
detection of explosives. While existing screening installations are effective to
detect metallic weapons and other metal objects, they are not always effective
for detecting explosives. In addition, advanced detection equipment has not been
uniformly deployed because of concerns relating to its efficacy, cost and
reliability.

In the aviation security market the need for deployment of more
sophisticated explosives detection systems has been recognized for some time. In
the aftermath of the bombing of Pan Am flight 103 over Scotland in 1988, the
Aviation Security Improvement Act of 1990 (the "Safety Act") was enacted. The
Safety Act directed the FAA to establish a research and development program
related to the development and implementation of explosives detection technology
and procedures to counteract terrorism against civilian aircraft. The Safety Act
directed the FAA to develop certification protocols for explosives detection
equipment and authorized the FAA Administrator to require the use of certified
equipment commencing thirty-six months after enactment.

In response to the requirements of the Safety Act, the FAA began funding
research and development of enhanced explosives detection technology. During the
past five years, the FAA has spent approximately $150,000,000 on such
activities. In addition, the FAA adopted a certification protocol regarding the
use of imaging detection systems for use on checked baggage. The imaging
protocol focuses on (i) the explosive substances to be detected, (ii) the
probability of detection, by explosive, (iii) the quantity of explosive that
must be detected, and (iv) the number of bags processed per hour. In addition
the protocol specifies a maximum acceptable false alarm rate by explosive. To
date, only one imaging system has met the requirements of the protocol. The FAA
has not mandated the deployment of such certified imaging equipment, in part,
because of its cost (approximately $2 million per screening station). Concern
also has been raised about its selectivity because its false alarm rate in
airport testing has been much higher than the protocol results had indicated.

A number of recent events, including the destruction of TWA flight 800 over
Long Island and the bombing at the 1996 Olympics in Atlanta, have refocused
attention on the need to deploy enhanced explosives detection equipment. In
response to the crash of TWA flight 800, the FAA issued a classified security
directive to all airlines subject to FAA regulation. Although the directive is
not publicly available, the Company believes that the directive mandated
enhanced security checks for all baggage checked-in through certain airports
using one of three techniques: manual searching, deployment of certified imaging
equipment and use of trace particle detection equipment. The Company believes
that airlines are using manual searching techniques to comply with the FAA
directive and have not deployed enhanced explosives detection equipment
primarily because of the cost of such equipment which, under existing FAA
regulations, must be borne by the airlines.

On international flights, the FAA has mandated that airlines subject to FAA
regulation comply with the International Civil Aviation Organization's
International Standards and Recommended Practices Safeguarding International
Civil Aviation Against Acts of Unlawful Interference ("Annex 17"). Annex 17
contains generalized recommendations regarding bag matching, the screening of
checked bags and the taking of "appropriate actions" to determine if carry-on
baggage contains explosives. For all international flights, the FAA requires
airlines to use bag matching, to X-ray all carry-on and checked baggage and to
confirm that electronic devices such as cellular telephones, tape recorders and
laptop computers are operational. For certain international flights, the FAA has
mandated more stringent security measures. The Company believes that the FAA
directive augments these procedures in certain respects.

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Annex 17 is implemented in a variety of ways outside the United States. In
the United Kingdom, for instance, certain airports have implemented a tiered
approach to baggage screening that utilizes trace particle detection equipment
to resolve potential security concerns. See "Explosives Applications." Certain
member countries have adopted different security protocols relying on manual
searching or other techniques and many have taken no actions to implement Annex
17.

As a result of the crash of TWA flight 800, the Gore Commission was formed
to examine the security measures currently in place in United States airports
and to make recommendations to the President with respect thereto. The Gore
Commission's initial report made a number of general recommendations regarding
the enhancement of airport security. These recommendations included, among other
things, that the government bear the initial cost of enhanced security
equipment, through ticket surcharges or other methods, that approximately
$160,000,000 be appropriated initially for the purchase of enhanced explosives
detection equipment at major airports, that approximately $50,000,000 be spent
in fiscal 1997 on research and development activities and that cooperation and
sharing of information among agencies be increased.

Partially in response to the Gore Commission's initial report, the
administration asked Congress to appropriate $1.1 billion to fund anti-terrorism
activities. In October 1996, Congress appropriated all the funds recommended by
the administration for fiscal 1997, including $144,000,000 for the purchase of
enhanced explosives detection equipment. A published report indicates that the
administration plans to use a portion of that appropriation to purchase 489
trace detection instruments in fiscal 1997. The Company believes that these
instruments will be used to augment screening of carry-on baggage and to resolve
false alarms reported by imaging equipment. Published reports estimate the total
cost of implementing enhanced explosives detection equipment at the 75 busiest
domestic airports will be upwards of $6 billion and will take ten years to
complete.

The Company believes that the aviation security market for the IONSCAN(R)
will expand significantly as a result of the actions of Congress and the Gore
Commission. While a substantial amount of the initial $144,000,000 appropriated
for the purchase of enhanced explosives detection equipment in fiscal 1997 will
be used to purchase equipment utilizing other technologies, such as CATSCAN,
enhanced X-ray, quadropole resonance and other imaging techniques, the Company
believes that, as indicated above, a significant number of trace particle
detection instruments, including IONSCAN(R)s, will be purchased. In addition,
the appropriation approved by Congress covers only a limited number of United
States airports. The Company believes that additional appropriations will be
required to deploy enhanced explosives detection equipment at all major airports
in the United States. However, there can be no assurance that funding for the
purchase of such equipment will be continued in subsequent fiscal years or as to
the level thereof. In addition, there can be no assurance as to the amount that
will ultimately be spent on the purchase of trace particle detection equipment
or as to the number of IONSCAN(R)s that will actually be purchased or that the
IONSCAN(R) will meet any certification or other requirements that may be adopted
in connection therewith.

Other explosives detection markets for the IONSCAN(R) have been similarly
affected by increased terrorist activity. For instance, as a result of the World
Trade Center bombing in 1990 and the 1995 bombing in Oklahoma City, the Company
has sold IONSCAN(R)s to customers, including the World Trade Center and the GSA,
for facilities protection applications.

Drug Interdiction

The Company believes that concerns regarding the increasing usage of
narcotics will result in substantial growth in the market for IONSCAN(R)s used
in drug detection and interdiction efforts. According to the Office of National
Drug Control Policy, use of certain illegal narcotics significantly increased
during the past five years. Recent surveys have also indicated that the use of
illegal narcotics by teenagers has reached a record level. X-ray scanning,
random searches and the use of canines have not resulted in sufficient progress
in programs to suppress illegal drug trafficking. Accordingly, customs and law
enforcement agencies, particularly in the United States, have increasingly
turned to more sophisticated detection equipment, including the IONSCAN(R), to
assist in their interdiction and detection efforts. The United States Coast
Guard and customs services throughout the world have purchased IONSCAN(R)s for
use in their drug interdiction efforts. Prisons throughout the United States and
around the world also are increasingly using sophisticated equipment, such as
the IONSCAN(R), to reduce drug use. Various prisons in the United States, as
well as in Canada and

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Mexico, have purchased IONSCAN(R)s to test visitors, packages, cell blocks and
vehicles for illegal narcotics. The Company believes that the successful
integration of the IONSCAN(R) in drug interdiction and detection activities by
the United States Coast Guard, as well as by the various customs services and
correctional facilities described above, will result in additional purchases of
the IONSCAN(R) for drug interdiction purposes, although no assurance can be
given in such regard.

As a result of increased drug usage and a heightened public awareness
regarding criminal activity generally, governmental agencies have increased
their spending on drug interdiction efforts. In addition, in connection with the
implementation of United States foreign policy, grants have been provided to
foreign countries, particularly in Latin America, for use in drug interdiction
efforts. The Company believes that as a result of the increased governmental
focus on drug prevention and the increased budgetary allocations for drug
intervention programs, the drug detection market for the IONSCAN(R) will
continue to grow, although no assurance can be given as to the growth of the
drug interdiction and detection market for the IONSCAN(R).

STRATEGY

The Company's objective is to strengthen its position as the leading
supplier of trace particle detection equipment by (i) further penetrating
existing markets for the IONSCAN(R) through aggressive pursuit of additional
sales from new and existing customers, (ii) expanding the uses of the
IONSCAN(R), particularly for security screening of individuals and for process
control and quality assurance in certain industrial applications, and (iii)
extending the capabilities and the potential uses of the IONSCAN(R) for
environmental, biological and chemical testing by, among other things, combining
the IMS technology used by the IONSCAN(R) with other existing technologies, such
as gas chromatography, and by developing a hand-held detector utilizing the
IONSCAN(R) technology. The following are the key elements of the Company's
strategy to achieve these objectives:

Increased Penetration of Existing Markets

The Company's primary strategic objective is to enhance its sales and
marketing capabilities to take advantage of existing and emerging selling
opportunities. The Company believes that the acceptance of the IONSCAN(R) by
customers worldwide and its performance in the field both for explosives
detection and drug detection place the Company in a favorable position to take
advantage of the expected growth in its markets.

Development of New Applications

The Company is developing new applications for its IONSCAN(R) technology.
For instance, under research grants from the FAA, the Company has begun
development of an individual passenger screening system for the aviation
security market. The Company believes that the IONSCAN(R) is uniquely suited for
this application due to its quick analysis time and high level of throughput in
terms of items checked per hour.

In addition, in the chemical manufacturing and processing industries,
instrumentation is used to ensure that specified chemicals are present and in
the correct proportions and to ensure the absence of other chemicals at various
stages of the process. The Company believes that the IONSCAN(R) is readily
adaptable for use in these applications.

Product Extension

The Company believes that the IONSCAN(R) can be combined with other readily
available technologies, particularly gas chromatography, to enable the
IONSCAN(R) to detect compounds contained in more difficult sampling media, such
as soil. The Company believes that a modified IONSCAN(R) would be able to break
down a complex matrix of chemicals to separate out the background material and
permit testing for the targeted substance on site, instead of requiring shipment
of a sample to an offsite laboratory for analysis. As a result, the modified
IONSCAN(R) could be utilized to field test for the presence of microscopic
organisms and other environmentally sensitive materials. In addition, the
Company intends to use a portion of the net proceeds of the Offering to fund the
development of a handheld detector utilizing the same technology as the
IONSCAN(R). Such an instrument could be used, for instance, by law enforcement
officers to test for the presence of illegal narcotics during an investigation.

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IONSCAN(R) TECHNOLOGY

The IONSCAN(R) is a portable, desktop instrument that utilizes a
proprietary implementation of ion mobility spectrometry to analyze samples for
the presence of targeted chemical compounds in amounts smaller than
one-billionth of a gram. An operator collects samples, either by utilizing a
hand-held suction device that contains a special filter cartridge which collects
the sampled matter or by swiping a cloth or glove across the surface to be
tested and then transferring the sampled matter to the cartridge. After the
sample has been collected, the filter cartridge is placed onto a slide tray on
the front of the IONSCAN(R) and inserted into a heating chamber. The sample is
then rapidly heated causing the sample to vaporize. The molecules contained in
the vapors from the sample are charged electrically converting them into ions
which are collected and then propelled through a testing chamber containing a
controlled mixture of calibrant gases. The speed at which each ion travels
through the testing chamber will vary depending upon its molecular structure.
The IONSCAN(R) measures the time of flight of the ions through the testing
chamber and, utilizing proprietary software containing Company-developed
detection algorithms, determines whether the targeted chemicals are present and
reports the results to the user. If traces of any of the targeted chemical
compounds are present, the IONSCAN(R)'s alarm will ring, a red light on the
IONSCAN(R) will flash and the screen will display a list of the targeted
substances which were detected. If no traces of the targeted substances are
detected, the IONSCAN(R) will display a green light. The IONSCAN(R) analyzes a
sample in approximately six seconds. Because the IONSCAN(R)'s analysis takes
place under high temperature, there is virtually no residue from the sample and,
under normal operating conditions, additional sampling can take place almost
immediately with no need to clean out the testing chamber. The following diagram
illustrates the operation of the IONSCAN(R).

[Schematic showing the operation of the IONSCAN(R)]

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The Company assembles IONSCAN(R)s from components supplied to it by various
suppliers and parts manufactured internally. Once the IONSCAN(R) is assembled,
the IONSCAN(R) is "burned in" for up to 400 hours using certain chemicals to
calibrate and tune the unit and to assure its proper functioning. After
successful completion of this procedure, the IONSCAN(R) is ready for shipment to
a customer.

The Company also has developed the IONSCAN(R) Manager software for use in
conjunction with the IONSCAN(R). The IONSCAN(R) Manager provides the user with
enhanced graphic read-outs of test results enabling the user to view the data in
more detail. Utilizing this software, a user can view multiple test results at
the same time, switch back and forth between test results and highlight
particular areas of interest to obtain greater detail. This software also can be
used to print out or save data and to transfer test results onto a computer disk
for storage, transportation or other uses, such as manipulation in chemical
studies.

In addition, the Company has developed the Barringer Link software, which
allows a remote user to have access to the IONSCAN(R). Typically, this software
is used by the customer to select different testing algorithms for the
IONSCAN(R) or to trouble shoot problems with the unit. A customer has the
capability to test for a different set of chemical compounds by remotely
downloading the necessary algorithms onto its IONSCAN(R). For instance, if a
United States Coast Guard vessel on patrol needs the capability to test a
suspect vessel for a particular type of illegal narcotics, the Coast Guard can
download the required information to its unit. In addition, the Barringer Link
allows the Company or the customer to run certain diagnostic programs to
determine problems which may have occurred within a particular unit and to
correct certain software problems.

EXPLOSIVES APPLICATIONS

Aviation Security

IONSCAN(R)s are currently used in explosives detection applications in the
aviation security market primarily outside the United States. In most cases, the
IONSCAN(R) is used to resolve concerns regarding checked or carry-on baggage
that may contain explosives. For instance, certain foreign airports have
implemented a three-tiered security procedure for checked baggage. All checked
bags are screened by an X-ray machine to identify those bags that may contain
explosive materials. Bags identified through that process are then subjected to
a second level of testing, generally using a more sensitive imaging system, such
as enhanced X-ray or CATSCAN. Bags that are not cleared at this second level are
either manually searched or tested using trace particle detection instruments
such as the IONSCAN(R). A number of IONSCAN(R)s have been purchased for this
purpose.

IONSCAN(R)s also are used to augment screening of carry-on baggage. The
carry-on bags of individuals meeting certain passenger profiles are searched
manually (including using bomb sniffing canines), screened by imaging equipment
or scanned using trace particle detection equipment, such as the IONSCAN(R).
Although the IONSCAN(R) was approved in 1992 by the FAA for screening electronic
items, there has been only limited use of it for such purpose.

Although most airports use manual searching to resolve concerns about
checked baggage and to provide enhanced security of certain carry-on baggage,
the Company believes that as a result of recent governmental initiatives,
governmental regulators will require deployment of more sophisticated equipment,
such as the IONSCAN(R). Currently, IONSCAN(R)s are used in 15 airports
throughout the world in explosives detection applications.

Other Transportation Security

IONSCAN(R)s also are employed in explosives detection applications in other
segments of the transportation industry. In Europe, IONSCAN(R)s are in use at
the Eurotunnel, which connects England and France, to scan vehicles and freight
for explosive materials. In addition, IONSCAN(R)s are used by British Rail and
train systems operating in the Eurotunnel to test for explosive materials. The
Company believes that this market will experience substantial growth as
governmental authorities increasingly recognize that terrorist acts, such as the
poison gas incidents in Tokyo in 1995, may involve other forms of public
transportation, such as

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<PAGE> 31

railroads and subways. However, there can be no assurance as to the ultimate
size of this market or as to the technologies that will be used to implement any
increased security measures.

Building Security and Forensics

IONSCAN(R)s are deployed at numerous facilities around the world, such as
large electric utilities and landmark buildings, that are perceived as
potentially likely targets for terrorist attacks. For instance, IONSCAN(R)s
currently are in use at the World Trade Center in New York as a result of the
bombing there in 1993. In addition, the Company recently sold several
IONSCAN(R)s to the GSA, which is responsible for the maintenance and security of
U.S. government buildings. In the wake of incidents such as the 1995 Oklahoma
City bombing and the bombing in Atlanta during the 1996 Summer Olympics, the
Company believes that this market will experience significant growth as the need
for physical security measures at public facilities increases, although there
can be no assurance as to the growth of this market for the IONSCAN(R). The
Company believes that the IONSCAN(R) is particularly well suited for this
application because of its fast scanning time, its high throughput and its low
cost compared to other available detection technologies.

Customers, such as the FBI, the New York City Police Department, and
military forces in Europe and the Middle East use the IONSCAN(R) for forensic
purposes to test debris for traces of explosives and other chemicals following
the occurrence of a bombing or explosion. For example, IONSCAN(R)s were used to
test debris from the crash of TWA flight 800 and at the site of the 1995
Oklahoma City bombing.

DRUG APPLICATIONS

Drug Interdiction

As a result of the increased usage of illegal narcotics, governmental
agencies in the United States and around the world are refining their drug
interdiction techniques. Metal detectors, X-ray equipment, random manual
searching and the use of canines have not resulted in sufficient progress in
programs to suppress illegal drug trafficking, and governmental agencies have
been increasingly utilizing more sophisticated detection equipment, including
the IONSCAN(R), to supplement their drug interdiction efforts. Currently, law
enforcement agencies around the world, including the FBI, the DEA, customs
officials in the United States and eight other countries, the U.S. and Japanese
Coast Guards, police departments in 10 states and five foreign countries and a
number of federal and foreign prisons use the IONSCAN(R) for this purpose.
IONSCAN(R)s also are in use in drug interdiction efforts in 16 airports
throughout the world.

The Company expects that this market will continue to grow as a result of
continuing drug trafficking, increased governmental attention in this area and
increased budgets for anti-drug activities. The Company believes that it will be
well-positioned to take advantage of the expected growth in this market because
of its large installed base, the breadth of its customers and the field
performance of the IONSCAN(R) to date, although no assurance can be given as to
the growth of the drug interdiction market for the IONSCAN(R).

Drug Detection

The increased usage of illegal narcotics also is driving sales of
IONSCAN(R)s to other entities for drug detection applications. For instance,
several large public utilities have purchased IONSCAN(R)s to test their
facilities, vehicles and employees for the presence of illegal narcotics. In
addition, various prisons in the United States, as well as in Canada and Mexico,
have purchased IONSCAN(R)s to test visitors and packages entering prisons, cell
blocks and vehicles for illegal narcotics. Drug rehabilitation centers also have
purchased IONSCAN(R)s to supplement their testing procedures for patients. The
Company believes that this market segment will experience additional growth as
other large utilities, prisons and drug rehabilitation centers seek to
supplement their current drug detection efforts, although no assurance can be
given as to the growth of the drug detection market for the IONSCAN(R).

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SALES AND MARKETING

The Company sells its products through a direct sales and support force of
18 persons located at its headquarters in New Jersey and at its offices in
Toronto, London and Paris. In addition, the Company has a network of independent
sales representatives located throughout Europe, the Middle East, Africa, Asia,
South America and Australia. See "Facilities." The Company also has entered into
sales representative agreements with Mitsubishi Heavy Industries for
distribution of the IONSCAN(R) in Japan. The Company's sales and marketing
efforts typically involve extensive customer visits, demonstrations and field
testing. Sales prospects generally are targeted by the Company or its
independent sales representatives, although the Company also responds to
requests for proposals.

Typically, the Company sells its IONSCAN(R) instruments for prices between
$50,000 and $95,000 per unit, depending principally on the configuration of the
unit and the purchaser's location. Once a sale is consummated, the Company
provides training at a customer's location to teach operators how to use the
IONSCAN(R), including proper sampling techniques. The Company generally provides
a one-year parts and labor warranty on its IONSCAN(R) instruments, although from
time to time the Company has entered into service contracts which include
extended warranties. To date, the Company's warranty claims experience has not
been significant.

The Company does not actively market its other specialty instruments or its
contract research and development services. However, from time to time the
Company responds to appropriate requests for proposals for non-IONSCAN(R)
instruments and such services. Although sales of such instruments and such
services have been material to the Company's historic results from time to time,
as a result of the expected increase in sales of the IONSCAN(R), the Company
does not expect that such sales will materially affect its results of operations
in future periods.

During 1995, no customer accounted for more than 10% of the consolidated
revenues of the Company. During 1994, one customer accounted for 10.8% of the
consolidated revenues of the Company.

BACKLOG

Although the Company's sales cycle is relatively long due to governmental
budgetary and procurement policies, once orders are placed customers typically
seek immediate delivery. Accordingly, for competitive purposes, the Company
follows the practice of manufacturing to a sales forecast. As a result, the
Company does not have a material backlog of orders for its instruments. The
Company anticipates that all of its instrument backlog at June 30, 1996 will be
shipped prior to December 31, 1996. Because the Company's funded research and
development activities are undertaken pursuant to contracts which typically run
for one or more fiscal periods, from time to time the Company has a backlog
relating to research and development activities to be performed in future
periods. Such backlog was not material at June 30, 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

MANUFACTURING AND ASSEMBLY

The Company manufactures and assembles IONSCAN(R)s at its facility in
Toronto, Canada, and has recently expanded its capabilities to manufacture and
assemble IONSCAN(R)s at its facility in New Providence, New Jersey. The Company
intends to use a portion of the net proceeds from the Offering to augment its
existing manufacturing and assembling capabilities. See "Use of Proceeds."

Although many of the basic components of the IONSCAN(R), such as
chipboards, resistors, capacitors, liquid crystal displays and other similar
components, are readily available from a number of sources, the Company
typically purchases such components from single suppliers. A limited number of
components and sub-assemblies are manufactured for the Company, pursuant to the
Company's proprietary specifications, but the Company does not believe it is
dependent on any single source for these items. To date, the Company has not
experienced any difficulty in obtaining any components or sub-assemblies.

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COMPETITION

The Company competes with other entities, a number of which have
significantly greater financial, marketing and other resources than the Company.
Principal competitive factors include selectivity (the ability of an instrument
to identify the presence of a particular substance), sensitivity (the ability of
an instrument to detect small amounts of a particular substance), false alarm
rate, price, marketing, ease of use and speed of analysis. The Company believes
that it competes effectively with respect to each of these factors.

The Company competes for governmental expenditures with equipment
manufacturers utilizing other types of detection technologies, including
CATSCANs, enhanced X-ray and quadropole resonance, as well as with manufacturers
of other IMS equipment and manufacturers using other trace particle detection
technologies, such as gas chromatography and chemoluminescence. Because trace
particle detection equipment is used in certain instances to verify detection
results obtained by other enhanced detection systems, the IONSCAN(R) and other
trace particle detection equipment are used in conjunction with systems
utilizing imaging technologies. As a result of recent governmental initiatives,
the Company anticipates that additional technologies, including improved IMS
technologies, will be developed and that new competitors will enter the
Company's markets. See "Risk Factors -- Dependence on and Effects of Government
Regulation."

In the trace particle detection market, the Company's main competitor is
Thermedics, Inc. ("Thermedics"), which has greater financial, marketing and
other resources than the Company. However, the Company believes that the
IONSCAN(R) has certain advantages over Thermedics' instrument, including faster
speed of analysis, lower cost, greater portability, lower power consumption and
lower weight. Accordingly, the Company believes that it competes effectively
with Thermedics and will continue to do so, although no assurance can be given.

The Company also competes with the present use by various law enforcement
agencies of canines to locate the presence of explosives or drugs. Although
canines have a highly developed sense of smell and are able to follow a trail,
the Company believes that its IONSCAN(R) instruments are more effective and cost
efficient than canines, because they can operate 24 hours a day, have greater
selectivity than canines and can identify the composition of the substance
detected.

GOVERNMENT REGULATION

Although the Company's business is not subject to significant government
regulation, government regulation plays a large role in determining the demand
for the IONSCAN(R). In the United States and most foreign countries, the
aviation industry is highly regulated and authorities, such as the FAA in the
United States, have the ability to recommend or mandate use of enhanced
explosives detection equipment.

The FAA has adopted a certification protocol regarding the use of imaging
detection systems for use on checked baggage. See "Overview." The FAA is
currently developing a certification protocol for trace particle detection
equipment, which the Company believes will be finalized in the second quarter of
1997. Once the protocol is adopted, the Company believes that only instruments
meeting the FAA certification requirements will be approved for use by airlines
subject to FAA regulation. Although the final protocol has yet to be adopted,
based on early versions of the testing criteria, as well as discussions with
representatives of the FAA, the Company believes that the IONSCAN(R) will meet
the FAA's certification requirements, although no assurance can be given. The
FAA has approved the IONSCAN(R) for screening of electronic carry-on items, such
as cellular telephones, tape recorders and laptop computers. In addition, the
FAA recently issued a classified security directive that the Company believes
authorizes the use of certain trace particle detection equipment, including the
IONSCAN(R), on carry-on baggage.

UNFUNDED RESEARCH AND DEVELOPMENT

The Company's research and development expenses totaled $57,000, $151,000,
$362,000 and $182,000, for the six months ended June 30, 1996 and the years
ended December 31, 1995, 1994 and 1993, respectively. These amounts primarily
relate to the development and enhancement of the Company's IONSCAN(R)
instruments. All of these amounts were funded by the Company.

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The Company intends to use a portion of the net proceeds from this Offering
to fund increased research and development of the IONSCAN(R). In addition to
further performance enhancements, the Company intends to combine the IONSCAN(R)
with other existing technologies, such as gas chromatography, to enable the
IONSCAN(R) to detect compounds contained in more difficult sampling media, such
as soil. The Company believes that the modified IONSCAN(R) would be able to
break down a complex matrix of chemicals to separate out the background material
and permit testing for the targeted substance on site instead of shipment of a
sample to an offsite laboratory for analysis. As a result, the modified
IONSCAN(R) could be utilized to field test for the presence of microscopic
organisms and other environmentally sensitive materials. In addition, the
Company intends to use a portion of the net proceeds of the Offering to fund the
development of a hand-held detector utilizing the same technology as the
IONSCAN(R). Such an instrument could be used, for instance, by law enforcement
officers to test for the presence of illegal narcotics during an investigation.
See "Strategy." In order to gain access to technology and manufacturing
expertise, the Company may also use a portion of the net proceeds of the
Offering to make strategic acquisitions or to enter into development joint
ventures. To date, the Company has not entered into any agreements or
understandings with respect to any such acquisitions or joint ventures. See "Use
of Proceeds."

PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS

The Company holds, through BRL, an aggregate of 10 patents throughout the
world related to equipment, systems and techniques. While such patents may be
regarded as having substantial value, the Company's current business is not
deemed to be materially dependent upon either the aggregate of such patents or
any one of them individually. The Company relies primarily on unpatented
proprietary know-how in building the IONSCAN(R) which it protects through the
use of nondisclosure agreements and other methods. However, the basic technology
used in the IONSCAN(R) is not proprietary to the Company and the same
functionality contained in the IONSCAN(R) could be duplicated by the Company's
competitors without violating the Company's patents.

The Company's initial development of the IONSCAN(R) was funded in part by
Transport Canada and Revenue Canada. Pursuant to an agreement with the Canadian
government, the Company has received a worldwide, perpetual license to certain
unpatented technology developed from such work and pays Revenue Canada a royalty
equal to 1% of sales of all IONSCAN(R) units. This licensing arrangement remains
exclusive until March 31, 1999. The Company has entered into an agreement in
principle with Revenue Canada, pursuant to which the Company expects to obtain
the right to renew such exclusive arrangement on a year by year basis for up to
ten additional years at which time Revenue Canada would have the right to
license the technology to third parties. Revenue Canada has retained the right
to use the technology and to produce products incorporating such technology
although, to date, Revenue Canada has not attempted to do so.

The Company believes that the IONSCAN(R) registered trademark has gained
recognition in the markets for the Company's products and is a valuable
trademark.

33
<PAGE> 35

FACILITIES

The Company does not own any real property and currently conducts its
operations at the following leased premises:

<TABLE>
<CAPTION>
SQUARE ANNUAL LEASE
LOCATION FOOTAGE LEASE COST EXPIRATION USE
- -------------------------- ------- ---------- -------------- ----------------------
<S> <C> <C> <C> <C>
219 South Street 4,910 $ 78,000 March 1998 Corporate
New Providence, NJ 07974 headquarters, sales,
service and assembly
1730 Aimco Boulevard 28,380 $102,000* September 2005 Research,
Mississauga, Ontario, manufacturing and
Canada L4W 1V1 assembly, sales,
service and
administrative
Aeroport DeParis 1,060 $ 21,000 February 1998 Sales and service
Riossytech
BP 10614-1 Rue Du Cercle
95724, Roissy C.D.G.
France
Unit 3 at Manor Royal 1,560 $ 19,000 February 1998 Sales and service
Crawley, West Sussex
England RH10 2QU
</TABLE>

- ---------------

* Increases to $156,000 on September 1, 2000.

EMPLOYEES

As of June 30, 1996, the Company had 62 full-time and 6 part-time employees
of whom 26 were engaged in manufacturing, 18 were engaged in research and
development activities, 16 of whom have advanced degrees (including 6
doctorates) and 24 were engaged in sales, service and general administration.
None of the Company's employees is represented by any union, and the Company
considers its relationships with its employees to be satisfactory.

LITIGATION

The Company is not a party to any material legal proceedings.

34
<PAGE> 36

MANAGEMENT

The following table sets forth the names and ages of the members the
Company's Board of Directors and its executive officers, and the positions with
the Company and its subsidiaries held by each:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- ---------------------------------------
<S> <C> <C>
Stanley S. Binder 54 Director, President and Chief Executive
Officer of the Company; Director of BRL
John H. Davies 60 Director and Executive Vice President
of the Company; President, Chief
Executive Officer and Director of BRL
John J. Harte 54 Director and Vice President, Special
Projects, of the Company
Richard D. Condon 61 Director of the Company
John D. Abernathy 59 Director of the Company
James C. McGrath 54 Director of the Company
Richard S. Rosenfeld 50 Vice President-Finance, Chief Financial
Officer, Treasurer and Assistant
Secretary of the Company
Kenneth S. Wood 44 Vice President and Secretary of the
Company; President of Barringer
Instruments, Inc. ("BII")
</TABLE>

Mr. Stanley S. Binder is a Director and the President and Chief Executive
Officer of the Company. He has been a director of the Company since 1991. Mr.
Binder also is a Director of Labco and BRL. In July 1989, Mr. Binder joined the
Company and has since held the following offices with the Company: President
from 1989 to the present date, Chief Operating Officer from 1989 to June 1990,
Chief Financial Officer from 1989 until July 1993, and Chief Executive Officer
from July 1990 to the present date. Mr. Binder also is an independent General
Partner in the Special Situations Fund III, L.P. ("SSF III"), a substantial
investor in the Company. See "Certain Relationships and Related Transactions."
Mr. Binder is chairman of the New Jersey Counsel of the American Electronics
Association and a member of the Board of Directors of the American Electronics
Association.

Mr. John H. Davies is a Director and Executive Vice President of the
Company and the President, Chief Executive Officer and a Director of BRL. Mr.
Davies has been an Executive Vice President and Director of the Company since
January 1992. Mr. Davies joined BRL in 1967 and has been the President and Chief
Executive Officer of BRL since August 1989.

Mr. John J. Harte is a Director and Vice President, Special Projects, of
the Company. He has been Vice President, Special Projects since 1991 and has
been Director since joining the Company in 1986. Mr. Harte also is the Chairman
of the Board of Labco. He is a certified public accountant and, since 1978, has
been a Vice President of Mid-Lakes Distributing Inc., a manufacturer and
distributor of heating and air conditioning parts and equipment located in
Chicago, Illinois.

Mr. Richard D. Condon has been a Director of the Company since February
1992. Since 1989, he has been a consultant to and director of Analytical
Technology, Inc., Boston, Massachusetts, a scientific instrumentation company.

Mr. John D. Abernathy, a Director of the Company since October 1993, is a
certified public accountant. Since January 1995, he has been Executive Director
of the law firm of Patton Boggs, LLP. From March 1994 to January 1995, he was a
financial and management consultant. From March 1991 to March 1994, he was the
Managing Director of Summit, Solomon & Feldesman, a law firm in dissolution
since March 1993. From July 1983 until June 1990, Mr. Abernathy was Chairman and
Chief Executive Partner of BDO Seidman, a public accounting firm. He also is a
Director of Oakhurst Company, Inc., a distributor of automotive parts and

35
<PAGE> 37

accessories, and Wahlco Environmental Systems, Inc., a manufacturer of air
pollution control and power plant efficiency equipment.

Mr. James C. McGrath, a Director of the Company since January 1994, is an
international security consultant. Since July 1989, he has been President of
McGrath International, Inc., a management consulting firm specializing in the
security field.

Mr. Richard S. Rosenfeld, a certified public accountant, has been Vice
President-Finance and Chief Financial Officer of the Company since July 1993. He
has been the Treasurer and Assistant Secretary of the Company since January
1992, and was a consultant to the Company from July 1991 to December 1991.

Mr. Kenneth S. Wood has been a Vice President of the Company and the
President of BII since January 1992 and the Secretary of the Company since March
1993. He was Vice President of Operations for BII from April 1990 to January
1992. From July 1978 until April 1990, he was Program Director for Lockheed
Electronics, the principal business of which is aerospace and defense
electronics.

All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. The Company's
Directors are elected by the holders of the Company's Common Stock, Class A
Convertible Preferred Stock and Class B Convertible Preferred Stock voting as a
single class. There are no family relationships among any of the directors or
executive officers.

COMPENSATION OF DIRECTORS

Outside directors are entitled to an annual retainer of $2,500 per quarter
and a fee of $1,000 for each meeting attended. Although Mr. Harte is a
non-employee director, he does not participate in the Company's compensation
plan for non-employee directors. Mr. Harte receives a fee of $2,000 per month
for services he renders to the Company, and a fee of $1,000 for each meeting he
attends in his capacity as a director. See "Employment Agreements and
Compensation Arrangements."

The Board of Directors has adopted the 1991 Directors Warrant Plan (the
"1991 Warrant Plan"), under which each non-employee director, upon election or
appointment to the Board, is offered 3,750 warrants, at $0.40 per warrant, each
of which may be exercised within five years to purchase one share of Common
Stock at an exercise price to be determined by the Board at the time the
warrants are issued, which may not be less than the then current market price
for the shares underlying the warrants. The 1991 Warrant Plan provides that each
such new director shall use the first quarterly director's fee to pay the
purchase price for such warrants.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Tenth of the Certificate of Incorporation and Section 10 of the
Company's by-laws, as amended ("By-laws"), provide that the Company shall, to
the fullest extent permitted by law, indemnify each person (including the heirs,
executors, administrators and other personal representatives of such person)
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement, actually and reasonably incurred by such person in connection
with any threatened, pending or actual suit, action or proceeding (whether
civil, criminal, administrative or investigative in nature or otherwise) in
which such person may be involved by reason of the fact that he or she is or was
a director or officer of the Company or is serving any other incorporated or
unincorporated enterprise in any of such capacities at the request of the
Company. Such provisions may provide indemnification to the officers and
directors of the Company for liability under the Securities Act.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

36
<PAGE> 38

EXECUTIVE COMPENSATION

The following table sets forth a summary of all compensation paid for the
past three fiscal years to the President and Chief Executive Officer of the
Company, the Chief Financial Officer of the Company and each other executive
officer of the Company whose total annual salary and bonus are $100,000 or more:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------- PAYOUTS
------------------------------- RESTRICTED SECURITIES ------- ALL OTHER
SALARY BONUS OTHER ANNUAL STOCK UNDERLYING LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS ($)(1)
- ------------------------------- ---- ------- ------ ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley S. Binder 1995 171,491 -- -- -- 45,000 -- 5,940
President and Chief 1994 167,757 -- -- -- -- -- 5,940
Executive Officer 1993 148,272 17,400 -- -- -- -- 5,492
John H. Davies 1995 125,775* -- 12,149(2) -- 31,250 -- --
Executive Vice President 1994 120,582* -- -- -- -- -- 5,741
of the Company; President 1993 115,785* 15,600 -- -- -- -- --
and Chief Executive Officer
of Barringer Research Ltd.
Kenneth S. Wood 1995 114,190 -- -- -- 26,250 -- 2,283
Vice President and Secretary 1994 109,751 -- -- -- -- -- 2,436
of the Company; President 1993 97,874 14,400 -- -- -- -- 2,386
of Barringer Instruments,
Inc.
Richard S. Rosenfeld 1995 96,000 -- -- -- 22,500 -- 4,410
Vice President Finance, 1994 90,400 -- -- -- -- -- 4,545
Treasurer and Chief 1993 68,094 12,600 -- -- -- -- 1,976
Financial Officer of the
Company
</TABLE>

- ---------------

* Amounts converted to U.S. dollars at the average exchange rate for the
respective year.

(1) Represents amounts contributed by the Company pursuant to the Company's
tax-qualified 401(k) deferred compensation plan ("401(k) Plan"). The 401(k)
Plan provides that the Company will make matching contributions to the
participants in the 401(k) Plan equal to 100% of the first 2% of a
participant's salary contributed and 50% of the next 5% of a participant's
salary contributed, which contributions vest proportionately over a
five-year period commencing at the end of the participant's first year with
the Company.

(2) The other annual compensation for Mr. John Davies represented the payment of
previously accrued and unpaid vacation pay.

The following table summarizes certain information relating to the grant of
options to purchase Common Stock to each of the executives included in the
Summary Compensation Table above:

OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE PRICE EXPIRATION
NAME GRANTED(#)(2) FISCAL YEAR(3) ($/SH) DATE
----------------------------------- ------------- ---------------- ------------- ----------
<S> <C> <C> <C> <C>
Stanley S. Binder.................. 45,000 24.80% $2.00 3/10/2000
John H. Davies..................... 31,250 17.20 $2.00 3/10/2000
Kenneth S. Wood.................... 26,250 14.50 $2.00 3/10/2000
Richard S. Rosenfeld............... 22,500 12.40 $2.00 3/10/2000
</TABLE>

- ---------------

(1) The Company did not grant any stock appreciation rights in 1995.

37
<PAGE> 39

(2) The stock options expire on March 10, 2000. Forty percent of each option
grant is exercisable after the first year, sixty percent after the second
year, eighty percent after the third year and one hundred percent after the
fourth year. See Note 7 of Notes to Consolidated Financial Statements.

(3) Options covering a total of 181,375 shares of Common Stock were granted in
1995.

In April 1996, the Company granted non-qualified options covering a total
of 253,000 shares of Common Stock to certain officers and directors of the
Company. These options are exercisable at $1.00 per share and expire on April
25, 2001. Twenty-five percent of each option grant was exercisable immediately,
fifty percent is exercisable after the first year, seventy-five percent is
exercisable after the second year and one-hundred percent is exercisable after
the third year.

The following table sets forth information with respect to the executive
officers named in the Summary Compensation Table concerning the exercise of
stock options during 1995 and unexercised options held by such executive
officers as of December 31, 1995:

AGGREGATED OPTION EXERCISES IN 1995 AND
FISCAL YEAR-END OPTION VALUES

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES SECURITIES UNDERLYING AT YEAR-END(1)
ACQUIRED VALUE OPTIONS/SARS AT YEAR-END --------------------
ON EXERCISE REALIZED ------------------------ EXERCISABLE/
NAME (#) ($) EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
--------------------------- ----------- -------- ------------------------ --------------------
<S> <C> <C> <C> <C>
Stanley S. Binder.......... -- -- 0/45,000 --
John H. Davies............. -- -- 0/31,250 --
Kenneth S. Wood............ -- -- 3,000/38,250 --
Richard S. Rosenfeld....... -- -- 1,250/27,500 --
</TABLE>

- ---------------

(1) The exercise price of such options exceeded the market price of the
underlying Common Stock on December 31, 1995.

BRL maintained a defined benefit pension plan for its Canadian employees
that was terminated on December 31, 1993. Mr. Davies was a participant in that
plan. His projected annual benefit at age 65 has been set at approximately
$54,000, which amount may be subject to change only in response to changes in
the Canadian pension regulatory scheme.

1990 OPTION PLAN

The Company maintained an option plan (the "1990 Option Plan") pursuant to
which the Company was authorized to issue options covering a total of 100,000
shares of Common Stock. No shares are available for issuance under the 1990
Option Plan. However, options covering a total of 32,500 shares of Common Stock
remain outstanding thereunder. Options granted pursuant to the 1990 Option Plan
are exercisable after the expiration of two years from the date of grant and
expire five years after the date of grant.

EXERCISE PROGRAM

In connection with the options granted by the Company to its employees, the
Board of Directors has approved a stock option exercise program (the "Exercise
Program"). The Exercise Program permits all employees of the Company and its
subsidiaries who are granted stock options (pursuant to either qualified or
non-qualified plans) to finance the exercise of such options by causing the
Company to issue the shares underlying such options upon receipt by the Company
from the employee of a full-recourse demand note evidencing indebtedness to the
Company in an amount equal to the exercise price. Such loans, which are secured
by the underlying shares of Common Stock, are interest-free for one year from
the date on which the employee exercises his or her option, after which interest
accrues at the prime rate, which rate is changed

38
<PAGE> 40

monthly. The loans are repaid with a portion of the proceeds from the sale of
the Common Stock to be received by the employees upon the exercise of their
options.

EMPLOYMENT AGREEMENTS AND COMPENSATION ARRANGEMENTS

The Company has entered into an Employment Agreement with Stanley S.
Binder, the President and Chief Executive Officer of the Company, (the
"Employment Agreement"), pursuant to which Mr. Binder receives $171,000 as
compensation, subject to increases equal to percentage increases in the Consumer
Price Index as well as by increases authorized by the Company's Executive
Compensation Committee. The Employment Agreement provides that it will be
automatically renewed each year, unless either party gives the other six months
prior written notice of non-renewal. In addition, under the Employment Agreement
Mr. Binder received an option to purchase 25,000 shares of Common Stock at an
exercise price of $4.00 per share, which approximated market value at the time
that the Employment Agreement was executed. In addition, Mr. Binder received a
non-qualified option to purchase 25,000 shares of Common Stock at an exercise
price of $8.00 per share, subject to anti-dilution provisions, which option
became exercisable immediately as to all shares subject thereto. Such
non-qualified option has been exercised by Mr. Binder, pursuant to the Stock
Option Exercise Program. See "Certain Relationships and Related Transactions."
During 1995, Mr. Binder received a non-qualified option to purchase 45,000
shares of the Company's Common Stock at $2.00 per share.

The Company expects to enter into employment agreements with both Kenneth
S. Wood and Richard S. Rosenfeld which will run for a term of one year, subject
to automatic renewal unless either the employee or the Company gives the other
party to the employment agreement 90 days' prior written notice of non-renewal.
Pursuant to the employment agreements, Messrs. Wood and Rosenfeld will receive
annual base salaries of $111,815 and $96,000, respectively, subject to periodic
increases at the discretion of the Board of Directors, and will be entitled to
participate in any cash bonus plan maintained by the Company. Both of the
employment agreements will provide, among other things, that, in the event of a
termination of employment by the Company without cause, or a termination by the
employee in certain circumstances following a "change in control" of the
Company, the employee will be entitled to receive certain severance benefits
(payable in equal monthly installments) determined on a formula basis. Both of
the employment agreements also will contain certain confidentiality and
non-competition provisions which would continue in effect following the
termination of the employee's employment by the Company.

The Company has entered into a Consulting Agreement with John J. Harte (the
"Consulting Agreement") pursuant to which Mr. Harte receives $2,000 per month as
compensation. The Consulting Agreement provides that it will be automatically
renewed each year, unless either party gives the other six months prior written
notice of non-renewal. In addition, under the Consulting Agreement, Mr. Harte is
entitled to participate in any grant of stock options to outside board members.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee is comprised of Messrs. Abernathy,
Harte and McGrath. During the fiscal year ended December 31, 1995, Mr. Harte was
also the Vice President, Special Projects, of the Company. Messrs. Abernathy and
McGrath were not officers or employees of the Company during fiscal 1995.

Mr. Harte is Chairman of the Board of Labco, and Mr. Binder is a Director
of Labco. Mr. Binder serves on the compensation committee of Labco's Board of
Directors. Except as described herein, no executive officer of the Company and
no member of the Compensation Committee is a member of any other business entity
that has an executive officer that sits on the Company's Board or on the
Compensation Committee. In January 1996, Mr. Binder received an option to
purchase 10,000 shares of Labco common stock at an exercise price equal to the
fair market value of the Labco Common Stock on the date of grant. For certain
other transactions between Labco and the Company, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Overview."

39
<PAGE> 41

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of August 26, 1996, the number of shares
of Common Stock, Class A Convertible Preferred Stock and Class B Convertible
Preferred Stock owned by each executive officer named in the Summary
Compensation Table, each director and all directors and executive officers as a
group and any persons (including any "group" as used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known by the Company to own beneficially 5% or
more of such securities. As of August 26, 1996, there were 3,506,474 shares of
Common Stock, 74,008 shares of Class A Convertible Preferred Stock and 207,500
shares of Class B Convertible Preferred Stock issued and outstanding. As of that
date, none of the executive officers and directors of the Company owned shares
of the Company's Class A Convertible Preferred Stock or Class B Convertible
Preferred Stock. The business address for all of the executive officers and
directors of the Company is 219 South Street, New Providence, New Jersey 07974.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF CLASS A CONVERTIBLE CLASS B CONVERTIBLE
COMMON STOCK(1)(2) PREFERRED STOCK PREFERRED STOCK
------------------------ ------------------------ ------------------------
NAME OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS SHARES CLASS SHARES CLASS
- ------------------------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stanley S. Binder.............. 110,386(3) 3.1% -- -- -- --
John H. Davies................. 93,295(4) 2.6 -- -- -- --
John J. Harte.................. 53,440(5) 1.5 -- -- -- --
Richard D. Condon.............. 20,500(6) * -- -- -- --
John D. Abernathy.............. 22,454(7) * -- -- -- --
James C. McGrath............... 20,500(6) * -- -- -- --
Kenneth S. Wood................ 47,574(8) 1.3 -- -- -- --
Richard S. Rosenfeld........... 36,161(9) 1.0 -- -- -- --
All directors and executive
officers as a group
consisting of eight (8)
persons...................... 404,309 10.8 -- -- -- --
Austin W. Marxe................ 966,522(10) 27.6 -- -- -- --
153 E. 53rd St.
New York, NY 10022
John R. Purcell................ 35,583 * -- -- 100,000 48.2%
700 Canal Street
Stamford, CT 06902-5921
Herbert Boeckmann II........... 21,350 * -- -- 60,000 28.9
155595 Roscoe Blvd.
Sepulveda, CA 93134-6503
R.R. Bowlin.................... 8,895 * -- -- 25,000 12.0
2300 West Jefferson
Ft. Wayne, IN 46802-4695
Esther & Carlos Otto........... 5,086 * 14,060 19.0% -- --
5245 Fishing Bridge
Cheyenne, WY 82009
Elizabeth Butenschoen.......... 2,362 * 6,530 8.8 -- --
434 Catskill Drive
Colfax, CA 95713
Max Gerber..................... 4,447 * -- -- 12,500 6.0
26 Broadway
New York, NY 10004-1776
</TABLE>

- ---------------

* Less than 1%

(1) Assumes the exercise of all outstanding warrants for Common Stock, the
conversion of each outstanding share of Convertible Preferred Stock, Class
A Convertible Preferred Stock and Class B Convertible Preferred Stock into
Common Stock, the conversion of the Debentures into shares of Common Stock
and the issuance of all shares of Common Stock subject to options
exercisable within 60 days of August 26, 1996 for each person or entity.

(2) Certain amounts shown are subject to adjustment in certain circumstances.

(3) Includes 31,750 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996, 12,500 shares of Common
Stock issuable upon exercise of warrants and 3,636 shares of Common Stock

40
<PAGE> 42

issuable upon conversion of Debentures owned by Mr. Binder. Excludes
558,561 shares of Common Stock owned by SSF III, of which Mr. Binder is an
independent General Partner. Mr. Binder disclaims beneficial ownership of
such shares.

(4) Includes 22,063 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996, 12,500 shares of Common
Stock issuable upon exercise of warrants and 5,454 shares of Common Stock
issuable upon conversion of Debentures owned by Mr. Davies.

(5) Includes 6,750 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996, 12,500 shares of Common
Stock issuable upon exercise of warrants and 9,090 shares of Common Stock
issuable upon conversion of Debentures owned by Mr. Harte.

(6) Includes 6,750 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996 and 8,750 shares issuable
upon exercise of warrants.

(7) Includes 6,750 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996, 6,250 shares of Common Stock
issuable upon exercise of warrants and 5,454 shares of Common Stock
issuable upon conversion of Debentures owned by Mr. Abernathy.

(8) Includes 33,938 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996 and 3,636 shares of Common
Stock issuable upon conversion of Debentures owned by Mr. Wood.

(9) Includes 22,125 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 26, 1996, 5,000 shares of Common Stock
issuable upon exercise of warrants and 3,636 shares of Common Stock
issuable upon conversion of Debentures owned by Mr. Rosenfeld as custodian
for a minor child.

(10) Includes (i) 369,553 shares of Common Stock, 256,667 shares of Common Stock
issuable upon the exercise of warrants and 72,727 shares issuable upon
conversion of Debentures owned by SSF III, and (ii) 83,333 shares of Common
Stock, 93,333 shares of Common Stock issuable upon the exercise of warrants
and 90,909 shares issuable upon conversion of Debentures owned by Special
Situations Cayman Fund, L.P. (the "Cayman Fund"). AWM Investment Company,
Inc. ("AWM") is the sole general partner of the Cayman Fund and the sole
general partner of MGP Advisors Limited ("MGP"), a general partner of SSF
III. Mr. Marxe is the President and Chief Executive Officer of AWM and the
principal limited partner of MGP. As such Mr. Marxe may be deemed to be the
beneficial owner of all of the shares held by SSF III and the Cayman Fund.
Stanley S. Binder, the Company's President and Chief Executive Officer, is
an independent general partner of SSF III. Mr. Binder disclaims beneficial
ownership of all shares held by SSF III.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to the Exercise Program, on April 21, 1994, Mr. Binder and Mr.
Wood exercised options to purchase 37,500 shares of Common Stock and 10,000
shares of Common Stock, respectively, in exchange for which Mr. Binder and Mr.
Wood executed notes payable to the Company in the amount of $203,000 and
$71,600, respectively. In 1995, for the period in which no interest accrued to
the Company (from January 1, 1995 through April 21, 1995), Mr. Binder and Mr.
Wood received benefits of $5,469 and $1,929 respectively, under the Stock Option
Exercise Program, representing interest otherwise payable on such notes.

On May 9, 1995 the Company sold to SSF III, of which Mr. Binder is an
independent General Partner with approximately .01% interest in such
partnership, and to the Cayman Fund, an affiliate of SSF III (collectively, with
SSF III, "SSF"), an aggregate of 125 units at a purchase price of $6,000 per
unit for an aggregate purchase price of $750,000. Each unit consisted of 2,500
shares of Common Stock and a five-year warrant to purchase 2,500 shares of
Common Stock at $1.96 per share, subject to certain anti-dilution provisions. As
an inducement to enter into the transaction and in lieu of a transaction fee,
the Company also issued to SSF warrants, exercisable for three years, to
purchase an aggregate of 37,500 shares of Common Stock at $1.96 per share,
subject to certain anti-dilution provisions. In addition, on June 30, 1995, the
Company sold 22 units to certain officers and directors of the Company for an
aggregate purchase price of $132,000. Such units were identical to those sold to
SSF.

41
<PAGE> 43

For a description of certain transactions between Labco and the Company,
see "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Overview." Mr. John Harte is Chairman of the Board of Labco and Mr.
Stanley Binder is a Director of Labco. See "Management - Compensation Committee
Interlocks and Insider Participation."

In July 1996, as part of a private placement and on the same terms as all
other investors, the Company issued Debentures in an aggregate amount of $50,000
and $150,000 to Herbert Gardner and William Barrett, respectively. Herbert
Gardner and William Barrett are officers of the Representative of the
Underwriters. Mr. Gardner and Mr. Barrett purchased the Debentures without any
understanding or agreement regarding this Offering. As part of the same private
placement, certain officers and directors of the Company purchased Debentures in
an aggregate principal amount of $85,000, and SSF purchased $700,000 in
principal amount of the Debentures.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The following is a brief summary of certain provisions of the capital stock
of the Company. Such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the Certificate of
Incorporation, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

The Company's authorized capital stock consists of 7,000,000 shares of
Common Stock, par value $.01 per share, 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, of which 270,000 shares are designated as
Class A Convertible Preferred Stock and 730,000 shares are designated as Class B
Convertible Preferred Stock. As of August 26, 1996, the Company had outstanding
3,506,474 shares of Common Stock, no shares of Convertible Preferred Stock,
74,008 shares of Class A Convertible Preferred Stock and 207,500 shares of Class
B Convertible Preferred Stock. Upon completion of the Offering, the Company will
have outstanding 4,756,474 shares of Common Stock (4,943,974 shares if the
Underwriters' over-allotment option is exercised in full). In addition, the
Company will have 1,877,994 shares of Common Stock (1,924,869 shares if the
Underwriters' overallotment option is exercised in full) reserved for issuance
pursuant to outstanding options and the Warrants, and upon conversion or
exercise of outstanding securities. See "Shares Eligible For Future Sale." As of
August 26, 1996, there were approximately 965 record holders of Common Stock.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote for each
share on all matters on which the holders of Common Stock are entitled to vote.
Subject to the rights of the outstanding shares of Convertible Preferred Stock
and Preferred Stock, the holders of the Common Stock are entitled to receive
ratably such dividends as may be declared by the Company's Board of Directors
out of funds legally available therefor. Holders of Common Stock are entitled to
share ratably in the net assets of the Company upon liquidation or dissolution
after payment or provision for all liabilities and the preferential liquidation
rights of the Convertible Preferred Stock and Preferred Stock then outstanding.
The holders of Common Stock have no pre-emptive rights to purchase any shares of
any class of stock of the Company. All outstanding shares of Common Stock are,
and the shares of Common Stock to be issued pursuant to the Offering will be,
upon payment therefor, fully paid and nonassessable.

PREFERRED STOCK

The Company's Preferred Stock may be issued from time to time in one or
more classes or series, and the Company's Board of Directors is authorized,
subject to any limitations prescribed by Delaware law, to fix the rights,
preferences and privileges of the shares and the qualifications, limitations or
restrictions thereon, the number of shares constituting such class or series and
the designation thereof, without any further vote or action by the stockholders.
Unless the designations establishing a particular series of Preferred Stock
provide that the shares of such series of Preferred Stock rank junior to the
Convertible Preferred Stock, all outstanding shares of Preferred Stock will rank
pari passu with the Convertible Preferred Stock.

42
<PAGE> 44

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
Depending upon the rights of such Preferred Stock, the issuance of additional
Preferred Stock could adversely affect the holders of Common Stock. For example,
Preferred Stock issued by the Company may rank senior to the Common Stock as to
dividend rights, liquidation preference or both, may have full or limited voting
rights and may be convertible into shares of Common Stock. Accordingly, the
issuance of shares of Preferred Stock may discourage bids for the Common Stock
at a premium or may otherwise adversely affect the market price of the Common
Stock.

The Company's Board of Directors has designated two series of Preferred
Stock, the Class A Convertible Preferred Stock and the Class B Convertible
Preferred Stock.

Class A Convertible Preferred Stock

Holders of Class A Convertible Preferred Stock are entitled to receive or
have set apart for payment, when and as declared by the Company's Board of
Directors, cumulative dividends at an annual rate of $.16 per share, payable
semiannually in cash or shares of Common Stock at the Company's option. Holders
of shares of Class A Convertible Preferred Stock are entitled to convert each
share of Class A Convertible Preferred Stock into .361745 of a share of Common
Stock. The number of shares of Common Stock into which each share of Class A
Convertible Preferred Stock is convertible is subject to adjustment in certain
events. The Class A Convertible Preferred Stock is redeemable any time, at the
Company's option, after the closing price of the Common Stock has been $12.00 or
more for ninety (90) consecutive trading days, in whole or in part, at $2.00 per
share, plus accrued dividends. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, holders of
Class A Convertible Preferred Stock will be entitled to a liquidation preference
of $2.00 per share plus accrued dividends. Holders of Class A Convertible
Preferred Stock are entitled to vote on all matters on which the holders of
shares of Common Stock are entitled to vote, vote together with the holders of
the Common Stock the Convertible Preferred Stock and the Class B Convertible
Preferred Stock as a single class, and in such circumstances will be entitled to
that number of votes which is equal to the number of shares of Common Stock into
which each share of Class A Convertible Preferred Stock held by such holder is
then convertible. Holders of Class A Convertible Preferred Stock also are
entitled to vote as a class in certain limited circumstances.

Class B Convertible Preferred Stock

Holders of Class B Convertible Preferred Stock are entitled to receive or
have set apart for payment, when and as declared by the Company's Board of
Directors, cumulative dividends at an annual rate of $.16 per share, payable
semiannually in cash or shares of Common Stock at the Company's option. Holders
of shares of Class B Convertible Preferred Stock are entitled to convert each
share of Class B Convertible Preferred Stock at any time after the date of
issuance thereof, into .355839 of a share of Common Stock. The number of shares
of Common Stock into which each share of Class B Convertible Preferred Stock is
convertible is subject to adjustment in certain events. The Class B Convertible
Preferred Stock is redeemable any time, at the Company's option, after the
closing price of the Common Stock has been $12.00 or more for ninety (90)
consecutive trading days, in whole or in part, at $2.00 per share, plus accrued
dividends. In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company, holders of Class B Convertible
Preferred Stock will be entitled to a liquidation preference of $2.00 per share,
plus accrued dividends. Holders of Class B Convertible Preferred Stock are
entitled to vote on all matters on which the holders of Common Stock are
entitled to vote, together with the holders of Common Stock, the Convertible
Preferred Stock and the Class A Convertible Preferred Stock as a single class,
and in such circumstances will be entitled to that number of votes which is
equal to the number of shares of Common Stock into which each share of Class B
Convertible Preferred Stock held by such holder is then convertible. Holders of
Class B Convertible Preferred Stock also are entitled to vote as a class in
certain limited circumstances.

43
<PAGE> 45

CONVERTIBLE PREFERRED STOCK

No Convertible Preferred Stock is currently issued or outstanding, and the
Company has no current plan to issue any shares of Convertible Preferred Stock.
Holders of Convertible Preferred Stock, when and if issued, will be entitled to
receive or have set apart for payment, when and as declared by the Company's
Board of Directors, cumulative dividends at an annual rate of $.10 per share,
payable semi-annually in Common Stock. Holders of shares of Convertible
Preferred Stock will be entitled to convert each share of Convertible Preferred
Stock at any time prior to the fourth anniversary of the date of issuance
thereof, into one (1) share of Common Stock. The Company will be entitled to
force a conversion of the Convertible Preferred Stock, but not with respect to
less than all of the outstanding shares, upon the occurrence of certain events
The number of shares of Common Stock into which each share of Convertible
Preferred Stock is convertible is subject to adjustment in certain events. In
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, holders of Convertible Preferred Stock will be
entitled to a liquidation preference of $1.25 per share. Holders of Convertible
Preferred Stock will be entitled to vote on all matters on which the holders of
Common Stock vote, together with the Common Stock, the Class A Convertible
Preferred Stock and the Class B Convertible Preferred Stock as a single class,
and in such circumstances will be entitled to that number of votes which is
equal to the number of shares of Common Stock into which each share of
Convertible Preferred Stock held by such holder is then convertible. Holders of
Convertible Preferred Stock will also be entitled to vote as a class in certain
circumstances including, a merger, consolidation, a sale of substantially all of
the Company's assets and the adoption of stock option or other incentive plans.

CERTAIN CHARTER PROVISIONS

The Company's Certificate of Incorporation contains provisions which
require the favorable vote by the holders of not less than 80% of the
outstanding shares of Common Stock for the approval of any merger, consolidation
or other combination with, or sale, lease or exchange of all or substantially
all of the assets of the Company to, another entity holding more than 10% of the
Company's outstanding voting equity securities or any affiliate of such entity.
These provisions could discourage potential acquisition proposals, delay or
prevent a change in control of the Company and limit the price that certain
investors might be willing to pay in the future for shares of the Company's
Common Stock.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

Section 203 of the Delaware General Corporation Law generally restricts a
corporation from entering into certain business combinations with an interested
stockholder (defined as any person or entity that is the beneficial owner of at
least 15% of a corporation's voting stock) or its affiliates for a period of
three years after the date of the transaction in which the person became an
interested stockholder unless (i) the transaction is approved by the board of
directors of the corporation prior to such business combination, (ii) the
interested stockholder acquires 85% of the corporation's voting stock in the
same transaction in which it exceeds 15%, or (iii) the business combination is
approved by the board of directors and by a vote of two-thirds of the
outstanding voting stock not owned by the interested stockholder. The Delaware
General Corporation Law provides that a corporation may elect not to be governed
by Section 203. At present, the Company does not intend to make such an
election. Section 203 may render more difficult a change in control of the
Company or the removal of incumbent management.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock and the Warrants is
American Stock Transfer & Trust Company, New York, New York.

SHARES ELIGIBLE FOR FUTURE SALE

44
<PAGE> 46

affiliates of the Company, all of which are freely tradeable, subject to the
lock-up described below. An additional 1,025,292 shares of Common Stock are
issuable to such officers, directors and other affiliates upon the conversion or
exercise of outstanding securities, including stock options. The Company
recently registered for resale 967,042 shares of Common Stock held by or
issuable to officers, directors and other affiliates of the Company upon the
exercise or conversion of outstanding securities which had previously been
restricted. The Company also intends, in the near future, to register for resale
an additional 414,500 restricted shares of Common Stock issuable upon exercise
of options previously granted to officers and directors. Thereafter, all
1,381,542 of such shares will be generally available for sale in the open market
by the holders thereof.

It is expected that the officers and directors of the Company, who hold an
aggregate of 681,934 shares of Common Stock (including shares issuable upon the
exercise or conversion of outstanding securities), will agree with the
Underwriters not to offer or sell, directly or indirectly, any securities of the
Company in the public market for a period of 180 days after the date of this
Prospectus, subject to certain exceptions, without the prior written consent of
Janney Montgomery Scott Inc. See "Underwriting."

DESCRIPTION OF WARRANTS

The following is a brief summary of certain provisions of the Warrants.
Such summary does not purport to be complete and is qualified in all respects by
reference to the actual text of the Warrant Agreement (the "Warrant Agreement")
between the Company, the Representative and American Stock Transfer & Trust
Company (the "Warrant Agent"). A copy of the Warrant Agreement has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part. See
"Additional Information."

EXERCISE PRICE AND TERMS

Each Warrant entitles the registered holder thereof to purchase one-quarter
of a share of Common Stock at an exercise price of $ per share [115% of
the initial offering price per share] prior to [thirty-six months from the date
of this Prospectus] subject to adjustment in accordance with the anti-dilution
and other provisions referred to below. The holder of any Warrant may exercise
such Warrant by surrendering the certificate representing the Warrant to the
Warrant Agent, with the subscription form thereon properly completed and
executed, together with payment of the exercise price. The Warrants may be
exercised at any time in whole or in part at the applicable exercise price until
expiration or redemption of the Warrants. No fractional shares will be issued
upon the exercise of the Warrants.

ADJUSTMENTS

The exercise price and the number of shares of Common Stock purchasable
upon the exercise of the Warrants are subject to adjustment upon the occurrence
of certain events, including stock dividends, stock splits, combinations or
reclassifications of the Common Stock, or sale by the Company of shares of its
Common Stock or other securities convertible into Common Stock (exclusive of
shares issued upon the exercise or conversion of outstanding options, warrants
and convertible securities) at a price below the market price (as defined) of
the Common Stock. Additionally, an adjustment would be made in the case of a
reclassification or exchange of Common Stock, consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the surviving corporation) or sale of all or
substantially all of the assets of the Company in order to enable Warrant
holders to acquire the kind and number of shares of stock or other securities or
property receivable in such event by a holder of the number of shares of Common
Stock that might otherwise have been purchased upon the exercise of the Warrant.

45
<PAGE> 47

REDEMPTION PROVISIONS

Commencing six months from the date of this Prospectus, the Warrants are
subject to redemption by the Company, at $.25 per Warrant, upon not less than 30
days' prior written notice, if the bid price of the Common Stock as reported by
NASDAQ averages in excess of 200% of the applicable exercise price of the
Warrants for a period of 30 days ending within 15 days of the redemption notice
date. In the event that the Company exercises the right to redeem the Warrants,
such Warrants will be exercisable until the close of business on the date for
redemption fixed in the redemption notice. If any Warrant called for redemption
is not exercised by such time, it will cease to be exercisable and its holder
will be entitled only to the redemption price.

TRANSFER, EXCHANGE AND EXERCISE

The Warrants are in registered form and may be presented to the Warrant
Agent for transfer, exchange or exercise at any time on or prior to the earlier
of (i) the redemption date, or (ii) their expiration date three years from the
date of this Prospectus, at which time the Warrants become wholly void and of no
value. If a market for the Warrants develops, the holder may sell the Warrants
instead of exercising them. There can be no assurance, however, that a market
for the Warrants will develop or continue.

WARRANT HOLDER NOT A STOCKHOLDER

The Warrants do not confer upon holders any voting, dividend or other
rights as stockholders of the Company.

MODIFICATION OF WARRANTS

The Company and the Warrant Agent may make such modifications to the
Warrants as they deem necessary and desirable that do not adversely affect the
interests of the warrant holders. The Company may, in its sole discretion, lower
the exercise price of the Warrants for a period of not less than thirty days on
not less than thirty days' prior written notice to the warrant holders and the
Representative. Except as described above, modification of the number of
securities purchasable upon the exercise of any Warrant, the exercise price and
the expiration date with respect to any Warrant or any other modification to the
Warrants requires the consent of the holders of two-thirds of the outstanding
Warrants.

The Warrants are not exercisable unless, at the time of the exercise, the
Company has a current prospectus covering the shares of Common Stock issuable
upon exercise of the Warrants, and such shares have been registered, qualified
or are deemed to be exempt under the securities laws of the state of residence
of the exercising holder of the Warrants. Although the Company will use its best
efforts to have all the shares of Common Stock issuable upon exercise of the
Warrants registered or qualified on or before the exercise date and to maintain
a current prospectus relating thereto until the expiration of the Warrants,
there can be no assurance that it will be able to do so.

The Warrants are separately transferable immediately upon issuance.
Although the Securities will not knowingly be sold to purchasers in
jurisdictions in which the Securities are not registered or otherwise qualified
for sale, purchasers may buy Warrants in the aftermarket in, or may move to,
jurisdictions in which the shares underlying the Warrants are not so registered
or qualified during the period that the Warrants are exercisable. In this event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants, and holders of Warrants would have no choice but to
attempt to sell the Warrants in a jurisdiction where such sale is permissible or
allow them to expire unexercised.

UNDERWRITER'S WARRANTS

In connection with this Offering, the Company has authorized the issuance
of the Underwriter's Warrants and has reserved 156,250 shares of Common Stock
for issuance upon exercise of such Underwriter's Warrants (including the
Warrants issuable upon exercise of the Underwriter's Warrants). The
Underwriter's Warrants will entitle the holder to acquire 125,000 shares of
Common Stock and 125,000 Warrants at an exercise price of $ per
Underwriter's Warrant and $ per Warrant. See "Underwriting."

46
<PAGE> 48

UNDERWRITING

Under the terms and subject to the conditions contained in the Underwriting
Agreement, each of the Underwriters named below (the "Underwriters") has
severally agreed to purchase, and the Company has agreed to sell to each such
Underwriter, the respective number of Securities set forth opposite the name of
such Underwriter below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SECURITIES
----------------------------------------------------------------- -------------
<S> <C>
Janney Montgomery Scott Inc......................................

----------
Total.................................................. 1,250,000
==========
</TABLE>

The obligations of the Underwriters are subject to certain conditions
precedent. The Underwriters are obligated to take and pay for all of the
Securities offered hereby (other than those covered by the over-allotment option
described below), if any such Securities are taken.

The Underwriters for whom Janney Montgomery Scott Inc. is acting as
representative (the "Representative") propose to initially offer the Securities
directly to the public at the initial offering price set forth on the cover page
hereof and to certain dealers (who may be Underwriters) at a price that
represents a concession not in excess of $ per Share and $ per
Warrant under the initial offering price. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per Share and
$ per Warrant to other Underwriters or to certain other dealers. After
the commencement of the offering, the public offering prices and such
concessions may be changed by the Representative. The Representative has
informed the Company that it does not expect sales to discretionary accounts by
the Underwriters to exceed five percent of the Securities offered hereby.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to 187,500 additional
Shares and 187,500 additional Warrants at the offering prices set forth on the
cover page hereof, less Underwriting discounts and commissions. The Underwriters
may exercise such option to purchase additional Shares and Warrants solely for
the purpose of covering over-allotments, if any, incurred in connection with the
sale of the Securities offered hereby.

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities that may be incurred in connection with the
Offering, including liability that may be incurred in connection with the
Offering under the Securities Act. In addition to underwriting discounts and
commissions, the Company has agreed to pay the Representative a non-accountable
expense allowance equal to 2% of the gross proceeds of this Offering.

The Company, and its present executive officers and directors, have agreed
not to offer, pledge, sell, contract to sell, grant any option for the sale of,
or otherwise dispose of, directly or indirectly, any securities of the Company
for a period of 180 days after the date of this Prospectus, subject to certain
exceptions, without the prior written consent of the Representative.

Certain Underwriters may engage in passive market making transactions in
the Common Stock on the NASDAQ Stock Market in accordance with Rule 10b-6A under
the Exchange Act prior to the commencement of offers or sales of Common Stock
offered hereby. Passive market making consists of displaying bids and effecting
transactions in the Common Stock at a price that is not in excess of the highest
bid price for the Common Stock that is displayed on NASDAQ by a market maker who
is not an Underwriter or an affiliated purchaser. New purchases on each day by a
passive market maker are limited to 30% of the average daily trading volume in
the Common Stock during the applicable period.

47
<PAGE> 49

Although it has no obligation to do so, the Representative currently
intends to make a market in the Company's Securities and may otherwise effect
transactions in such Securities. Such market-making activity may be discontinued
at any time.

In connection with this offering, the Company has agreed to sell to the
Representative, at a purchase price of $.0012 per Underwriter's Warrant,
Underwriter's Warrants to purchase from the Company 125,000 shares of Common
Stock and 125,000 Warrants (the "Underlying Warrants"). Each Underlying Warrant
entitles the holder to purchase one-quarter of a share of Common Stock at an
exercise price of $ per share [115% of the initial offering price per share].
The Underlying Warrants expire three years from the date of this Prospectus. The
Underwriter's Warrants are exercisable for a period of four years commencing one
year after the date of this Prospectus at an exercise price (the "Exercise
Price") of 115% of the initial offering price of the Securities. The
Underwriter's Warrants and the Underlying Warrants provide for adjustment in the
number of shares of Common Stock issuable upon the exercise thereof as a result
of certain events, including stock dividends, stock splits, combinations and
issuance of Common Stock for consideration less than the Exercise Price, subject
to certain exceptions. The Underwriter's Warrants are restricted and may not be
sold, transferred, assigned or hypothecated for a period of one year from the
date of this Prospectus, except to officers of the Representative. The holders
of Underwriter's Warrants and Underlying Warrants have no voting, dividend or
other rights as stockholders of the Company with respect to shares underlying
such warrants, or shares purchasable upon exercise of such warrants until and to
the extent shares of Common Stock have been purchased, upon exercise of such
warrants.

If the Underwriter's Warrants to purchase Common Stock or the Underlying
Warrants are exercised, the value of the Common Stock held by public investors
will be diluted. The Underwriter's Warrants and the Underlying Warrants afford
the holders thereof the opportunity, at nominal cost, to profit from a rise in
the market price of the Common Stock, which may adversely affect the terms upon
which the Company could issue additional shares of Common Stock during the
four-year exercise period.

A new registration statement or post-effective amendment to the
registration statement of which this Prospectus is a part will be required to be
filed and declared effective before distribution to the public of shares of
Common Stock issuable upon exercise of the Underwriter's Warrants and the
Underlying Warrants (the "Warrant Shares"). The Company has agreed, on one
occasion when requested by the holders of a majority of the Warrant Shares and
the Underlying Warrants, to make necessary filings, at its expense (subject to a
maximum of $25,000), to permit a public offering of the Warrant Shares during
the period beginning one year after the date of this Prospectus and ending four
years thereafter, and to use its best efforts to cause such filing to become
effective and remain effective for a period of at least one year. In addition,
the Company has agreed, during the period commencing at the beginning of the
second year and concluding at the end of the fifth year after the effective date
of the Registration Statement, to give advance notice to holders of
Underwriter's Warrants, Underlying Warrants and Warrant Shares of its intention
to file a registration statement and, in such case, holders of such securities
shall have the right to require the Company to include the Warrant Shares and
the Underlying Warrants in such registration statement at the Company's expense
and to maintain the effectiveness of such registration statement for a period of
at least one year.

48
<PAGE> 50

LEGAL MATTERS

The validity of the Securities offered hereby will be passed upon for the
Company by Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A., Roseland, New
Jersey. Certain legal matters in connection with the Offering will be passed
upon for the Underwriters by Rosenman & Colin LLP, New York, New York.

EXPERTS

The Consolidated Financial Statements included in the Prospectus of
Barringer Technologies Inc. and subsidiaries as of December 31, 1994 and 1995
and each of the years in the three-year period ended December 31, 1995, have
been audited by BDO Seidman, LLP, independent certified public accountants, as
stated in their reports appearing herein and elsewhere in the Registration
Statement, and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.

49
<PAGE> 51

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants.................................... F-2
Consolidated Balance Sheets -- December 31, 1995 and 1994 and June 30, 1996
(unaudited)......................................................................... F-3
Consolidated Statements of Operations -- For Each of the Three Years Ended December
31, 1995, 1994 and 1993 and for the Six-Month Periods Ending June 30, 1996 and 1995
(unaudited)......................................................................... F-4
Consolidated Statements of Cash Flows -- For Each of the Three Years Ended December
31, 1995, 1994 and 1993 and for the Six-Month Periods Ending June 30, 1996 and 1995
(unaudited)......................................................................... F-5
Consolidated Statements of Stockholders' Equity -- For Each of the Three Years Ended
December 31, 1995, 1994 and 1993 and for the Six-Month Period Ending June 30, 1996
(unaudited)......................................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 52

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Barringer Technologies Inc.
New Providence, New Jersey

We have audited the accompanying consolidated balance sheets of Barringer
Technologies Inc. as of December 31, 1995 and 1994 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1995. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Barringer
Technologies Inc. at December 31, 1995 and 1994 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

BDO Seidman, LLP

Woodbridge, New Jersey
March 27, 1996

F-2
<PAGE> 53

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.................................................... $ 267 $ 43 $ 17
Receivables, less allowances of $539, $41 and $90 (note
5)................................................... 2,565 1,533 2,658
Inventories............................................. 1,790 1,621 1,652
Prepaid expenses and other.............................. 220 250 276
Deferred tax asset (note 8)............................. 225 225 225
-------- -------- --------
Total current assets................................. 5,067 3,672 4,828
Property and equipment, net (note 4)...................... 1,364 586 558
Investment in unconsolidated subsidiary (note 2).......... -- 334 355
Other..................................................... 361 143 140
-------- -------- --------
$ 6,792 $ 4,735 $ 5,881
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank indebtedness and other notes (note 5).............. $ 1,160 $ 744 $ 1,231
Accounts payable........................................ 1,632 1,278 1,117
Accrued liabilities..................................... 949 723 902
Accrued payroll and related taxes....................... 444 257 338
Current portion of long-term debt (notes 6 and 14)...... 230 300 300
-------- -------- --------
Total current liabilities............................ 4,415 3,302 3,888
Other non-current liabilities............................. 451 108 113
Minority interest in subsidiary (note 2).................. 740 -- --
Commitments (notes 9 and 10)
Stockholders' equity (notes 6, 7 and 14):
Convertible preferred stock, $1.25 par value, 1,000
shares authorized, 445, 0, and 0 shares outstanding,
respectively......................................... 555 -- --
Preferred Stock, $2.00 par value, 4,000 shares
authorized, 270 shares designated class A convertible
preferred stock, 83, 83, and 74 shares outstanding,
less discount of $64, $64 and $57, respectively.... 101 101 91
730 shares designated class B convertible preferred
stock, 318, 258, and 233 shares outstanding,
respectively....................................... 635 515 465
Common stock, $0.01 par value, 5,000, 7,000, and 7,000
shares authorized, respectively and 2,872, 3,479, and
3,498 shares outstanding, respectively............... 29 35 35
Additional paid-in capital.............................. 16,036 17,685 17,765
Accumulated deficit..................................... (15,633) (16,542) (16,003)
Cumulative foreign currency translation adjustment...... (524) (456) (460)
-------- -------- --------
1,199 1,338 1,893
Less: common stock in treasury, at cost, 31 shares...... (13) (13) (13)
-------- -------- --------
Total stockholders' equity........................... 1,186 1,325 1,880
-------- -------- --------
$ 6,792 $ 4,735 $ 5,881
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 54

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -----------------
1993 1994 1995 1995 1996
------ ------- ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues from operations.................... $7,770 $ 5,514 $ 6,374 $3,110 $5,012
Cost of sales............................... 3,930 4,269 3,804 1,892 2,647
------ ------- ------- ------ ------
Gross profit.............................. 3,840 1,245 2,570 1,218 2,365
Operating expenses:
Selling, general and administrative....... 3,117 3,352 3,305 1,300 1,641
Unfunded research and development......... 182 362 151 104 57
------ ------- ------- ------ ------
3,299 3,714 3,456 1,404 1,698
------ ------- ------- ------ ------
Operating income (loss)................ 541 (2,469) (886) (186) 667
Other income, (expense):
Interest expense.......................... (164) (202) (240) (122) (130)
Equity in earnings of Labco............... -- -- -- -- 20
Other..................................... 63 113 (52) (48) 7
------ ------- ------- ------ ------
(101) (89) (292) (170) (103)
Income (loss) before income tax
provision (benefit).................. 440 (2,558) (1,178) (356) 564
Income tax provision (benefit) (note 8)..... (153) 75 -- -- --
------ ------- ------- ------ ------
Income (loss) from continuing
operations........................... 593 (2,633) (1,178) (356) 564
Operation held for sale (note 2):
Income from operations.................... 2 68 258 55 --
Gain on sale of a portion of investment
in Labco............................... -- -- 93 -- --
------ ------- ------- ------ ------
2 68 351 55 0
------ ------- ------- ------ ------
Net income (loss)...................... 595 (2,565) (827) (301) 564
Preferred stock dividends................... (114) (108) (82) (51) (24)
------ ------- ------- ------ ------
Net income (loss) attributable to common
stockholders.............................. $ 481 $(2,673) $ (909) $ (352) $ 540
====== ======= ======= ====== ======
Primary Per Share Data (note 1):
Continuing operations..................... $ 0.20 $ (0.97) $ (0.39) $(0.13) $ 0.16
Operation held for sale:
Income from operations................. -- 0.02 0.08 0.02 --
Gain on sale of a portion of investment
in Labco............................. -- -- 0.03 -- --
------ ------- ------- ------ ------
Net income (loss) per share................. $ 0.20 $ (0.95) $ (0.28) $(0.11) $ 0.16
====== ======= ======= ====== ======
Fully Diluted Per Share Data (note 1):
Continuing operations..................... $ 0.20 $ (0.97) $ (0.39) $(0.13) $ 0.15
Operation held for sale:
Income from operations................. -- 0.02 0.08 0.02 --
Gain on sale of a portion of investment
in Labco............................. -- -- 0.03 -- --
------ ------- ------- ------ ------
Net income (loss) per share............... $ 0.20 $ (0.95) $ (0.28) $(0.11) $ 0.15
====== ======= ======= ====== ======
Weighted average common and common
equivalent shares outstanding
Primary................................... 2,570 2,827 3,283 3,060 3,483
Fully diluted............................. 2,570 2,827 3,283 3,060 3,854
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 55

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ----- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net income (loss)............................. $ 595 $(2,565) $(827) $ (301) $ 564
Items not affecting cash:
Depreciation and amortization.............. 625 711 362 309 75
Inventory write-down and receivable
reserves................................. -- 1,210 656 -- --
Minority interest.......................... (2) (76) -- -- --
Income and gain from operation held for
sale..................................... -- -- (351) (55) --
Pension recovery........................... (92) -- (147) -- --
Deferred tax expense (benefit)............. (300) 75 -- -- --
Prepaid pension cost....................... (132) 132 (78) -- --
Other...................................... (27) 235 71 81 (1)
Decrease (increase) in non-cash working
capital balances........................... (2,819) 206 (397) (695) (1,083)
------- ------- ----- ------ -------
Cash used in operating activities........ (2,152) (72) (711) (661) (445)
------- ------- ----- ------ -------
Investing Activities:
Purchase of equipment, net and other.......... (473) (847) (358) (262) (47)
Escrowed cash on sale of Canadian
subsidiary................................. (225) 225 -- -- --
Proceeds on sale of partial interest in
Labco...................................... -- -- 300 -- --
Increase in investment in Labco............... -- -- -- (133) (21)
------- ------- ----- ------ -------
Cash used in investing activities........ (698) (622) (58) (395) (68)
------- ------- ----- ------ -------
Financing Activities
Reduction in long-term debt................... (43) (184) -- -- --
Increase (decrease) in bank debt and other.... 407 488 (412) 210 487
Proceeds on issuance of securities and
other...................................... 2,308 171 888 905 --
Rent inducement............................... -- -- 108 -- --
Receipt of subscriptions receivable........... 100 -- -- -- --
------- ------- ----- ------ -------
Cash provided by financing activities.... 2,772 475 584 1,115 487
------- ------- ----- ------ -------
Decrease in cash................................ (78) (219) (185) 59 (26)
Cash -- beginning of period..................... 564 486 267 267 43
Less cash held for sale......................... -- -- (39) -- --
------- ------- ----- ------ -------
Cash -- end of period........................... $ 486 $ 267 $ 43 $ 326 $ 17
======= ======= ===== ====== =======
Changes in components of non-cash working
capital balances related to operations:
Receivables................................... $(3,075) $ 1,249 $ 38 $ (757) $(1,125)
Inventories................................... (593) (987) (281) 281 (31)
Other current assets.......................... (50) (58) 60 (8) (26)
Other assets.................................. -- -- (12) (32) --
Accounts payable and accrued liabilities...... 899 2 (202) (179) 99
------- ------- ----- ------ -------
Decrease (increase) in operating assets net of
operating liabilities arising from cash
transactions.................................. $(2,819) $ 206 $(397) $ (695) $(1,083)
======= ======= ===== ====== =======
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 56

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
TOTAL --------------- --------------- --------------- --------------- PAID IN
EQUITY SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992.... $ 709 2,423 $ 24 452 $ 564 166 $ 203 471 $ 941 $12,765
Exercise of stock options/
warrants.................... 1,315 156 2 1,313
1993 dividend on preferred
stock....................... 0 11 114
Conversion of preferred stock
to common................... 0 63 1 (7) (9 ) (83) (102 ) (153) (306 ) 416
Subscription receivable
payments.................... 100 100
Sale of common stock in
private placement, net...... 768 109 1 767
Sale of treasury stock........ 225 208
Net income.................... 595
Translation adjustments....... (66)
------ ----- --- ---- ----- --- ----- ---- ----- -------
Balance December 31, 1993....... 3,646 2,762 28 445 555 83 101 318 635 15,683
Exercise of stock
options/warrants............ 168 72 1 167
Issuance of common stock
pursuant to settlement of
1993 litigation............. 70 12 78
1994 dividend on preferred
stock....................... 0 26 108
Net loss...................... (2,565)
Translation adjustment........ (133)
------ ----- --- ---- ----- --- ----- ---- ----- -------
Balance December 31, 1994....... 1,186 2,872 29 445 555 83 101 318 635 16,036
Sale of units in private
placement, net.............. 888 383 4 884
Conversion of preferred
stock....................... 0 159 2 (445) (555 ) (60) (120 ) 673
Change in warrant exercise
price in payment of debt.... 10 10
1995 dividend on preferred
stock....................... 0 65 82
Net loss...................... (827)
Translation adjustment........ 68
------ ----- --- ---- ----- --- ----- ---- ----- -------
Balance December 31, 1995....... 1,325 3,479 35 0 0 83 101 258 515 17,685*
Conversion of preferred stock
(unaudited)................. 0 12 (9) (10 ) (25) (50 ) 60
1996 dividend on preferred
stock (unaudited)........... 0 7 24
Net income (unaudited)........ 564
Translation adjustment
(unaudited)................. (5)
Miscellaneous adjustment
(unaudited)................. (4) (4)
------ ----- --- ---- ----- --- ----- ---- ----- -------
Balance June 30, 1996
(unaudited)................... $1,880 3,498 $ 35 0 $ 0 74 $ 91 233 $ 465 $17,765*
====== ===== === ==== ===== === ===== ==== ===== =======

ACCUMULATED FOREIGN TREASURY
DEFICIT TRANSLATION STOCK
----------- ----------- --------
<S> <C> <C> <C>
Balance at December 31, 1992.... $ (13,441) $(325) $(22)
Exercise of stock options/
warrants....................
1993 dividend on preferred
stock....................... (114)
Conversion of preferred stock
to common...................
Subscription receivable
payments....................
Sale of common stock in
private placement, net......
Sale of treasury stock........ 17
Net income.................... 595
Translation adjustments....... (66)
-------- ----- ----
Balance December 31, 1993....... (12,960) (391) (5)
Exercise of stock
options/warrants............
Issuance of common stock
pursuant to settlement of
1993 litigation............. (8)
1994 dividend on preferred
stock....................... (108)
Net loss...................... (2,565)
Translation adjustment........ (133)
-------- ----- ----
Balance December 31, 1994....... (15,633) (524) (13)
Sale of units in private
placement, net..............
Conversion of preferred
stock.......................
Change in warrant exercise
price in payment of debt....
1995 dividend on preferred
stock....................... (82)
Net loss...................... (827)
Translation adjustment........ 68
-------- ----- ----
Balance December 31, 1995....... (16,542) (456) (13)
Conversion of preferred stock
(unaudited).................
1996 dividend on preferred
stock (unaudited)........... (24)
Net income (unaudited)........ 564
Translation adjustment
(unaudited)................. (1) (4)
Miscellaneous adjustment
(unaudited).................
-------- ----- ----
Balance June 30, 1996
(unaudited)................... $ (16,003) $(460) $(13)
======== ===== ====
</TABLE>

- ---------------

* At December 31, 1995 and June 30, 1996, net of notes receivable of $274 from
the sale of stock.

See notes to consolidated financial statements.

F-6
<PAGE> 57

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JUNE 30, 1996 AND THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements comprise the accounts of
the Company and its continuing subsidiary companies. All intercompany
transactions have been eliminated.

Principles of Translation

Assets and liabilities of the Company's foreign subsidiaries are translated
by using year-end exchange rates and income statement items are translated at
average exchange rates for the year. Translation adjustments are accumulated in
a separate component of stockholders' equity.

Inventories

Materials and supplies are carried at the lower of average cost or
replacement cost. Finished goods and work-in process are carried at the lower of
average cost or net realizable value.

Property and Equipment

Property and equipment are carried at cost. Depreciation of owned equipment
is computed on a straight-line basis over the estimated useful lives of the
related assets, generally from three to ten years. Leasehold improvements are
amortized over the term of the related lease, generally from five to ten years,
which approximates the useful lives of these improvements. Equipment under
capital leases is amortized on a straight-line basis over the term of the lease,
generally four to ten years, which approximates the estimated useful lives of
the leased equipment.

Per Share Data

Income (loss) per share is computed by dividing net income (loss), less
preferred stock dividends, by the weighted average number of common and common
equivalent shares outstanding during the period. Common equivalent shares
consist of the dilutive effect, if any, of unissued shares under options and
warrants, computed using the treasury stock method (using the average stock
prices for primary basis and the higher of average or period-end stock prices
for fully diluted basis). In applying the treasury stock method, the provisions
of Accounting Principles Board Opinion 15, paragraph 38 were considered and had
a dilutive effect on the fully diluted earnings per share calculation for the
six months ended June 30, 1996. The effect of this provision is to limit the
number of shares assumed to have been purchased under the treasury stock method
to 20% of outstanding shares and apply the excess proceeds to reduce borrowings
and related interest expense.

Statement of Cash Flows

For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents.

Revenue Recognition

The Company recognizes revenue on the percentage of completion method for
its research and development contracts with progress measured based on the ratio
of costs incurred to the total estimated cost, and generally, when product is
shipped for all other sales. Where the Company receives contracts for the design
and construction of specialty instruments that require long manufacturing times,
the Company will also

F-7
<PAGE> 58

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recognize revenue on the percentage of completion method similar to its
recognition method in the research and development business.

For the year ended December 31, 1995, the Company had recognized revenues
of $264,000 on jobs in process and had incurred related costs of $183,000, of
which $210,000 were billed to customers at December 31, 1995. For the six months
ended June 30, 1996, the Company had recognized revenues of $123,000 on jobs in
process and had incurred costs of $60,000, of which $87,000 were billed to
customers at June 30, 1996.

Financial Instruments and Credit Risk Concentration

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
Concentrations of credit risk with respect to such receivables are limited
primarily to United States and Canadian governmental agencies.

Long-Lived Assets

Long-lived assets, such as property and equipment, are evaluated for
impairment when events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through the estimated undiscounted
future cash flows from the use of these assets. When any such impairment exists,
the related assets will be written down to fair value. This policy is in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
of ", which is effective for the fiscal years beginning after December 15, 1995.
No write-downs have been necessary through June 30, 1996.

Stock-Based Compensation

The Company does not presently intend to adopt the fair value based method
for accounting for stock compensation plans as permitted by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", which is effective for transactions entered into in fiscal years
that begin after December 15, 1995.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, accounts receivable, accounts payable, and accrued
liabilities approximate fair value because of the immediate or short-term
maturity of these financial instruments.

Unaudited Information

The consolidated balance sheet of the Company as of June 30, 1996, the
consolidated statements of operations and cash flows for the six months ended
June 30, 1996 and 1995, the consolidated statement of stockholders' equity for
the six months ended June 30, 1996 and the notes to such financial statements,
are unaudited. However, in the opinion of management, such financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
for a fair presentation. The results of operations for the interim periods are
not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these

F-8
<PAGE> 59

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

estimates. Many of the Company's estimates and assumptions used in the financial
statements relate to the Company's products, which are subject to technology and
market changes. It is reasonably possible that changes may occur in the near
term that would affect management's estimates with respect to inventories and
equipment.

2. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY

During the first quarter of 1995, the Company began to seek a purchaser for
its then 47% interest in Barringer Laboratories, Inc. ("Labco"). Accordingly,
the financial statements have been reclassified, where appropriate, to reflect
Labco as an operation held for sale.

Pursuant to the terms of a Stock Purchase Agreement, dated December 8, 1995
("Agreement"), by and between the Company and Labco, on December 13, 1995 the
Company sold to Labco 647,238 shares of Labco's common stock for an aggregate
purchase price of $809,000, resulting in a gain of $93,000. The purchase price
consisted of cancellation of all intercompany obligations and $300,000 in cash.
After giving effect to the sale of the Labco shares, the Company continued to
own 437,475 shares of Labco stock.

Under the terms of the Agreement, all intercompany agreements between the
Company and Labco terminated and certain collateral securing the Company's
obligations thereunder was returned to the Company. However, pursuant to the
terms of the Agreement, Labco retained 88,260 shares of Labco stock owned by the
Company (the "Retained Shares"). In the event that Labco meets certain pre-tax
earnings goals for 1996, those shares will be returned to the Company. If Labco
does not meet such goals, all or a portion of such Retained Shares will be
retained by Labco. The Company has reduced its gain by the value of the retained
shares.

The Company also agreed to terminate all voting arrangements allowing it to
vote shares of Labco stock not owned by it and agreed for a period of 24 months
not to enter into any such voting arrangements. In addition, the Company granted
Labco the right, until January 2, 1997, to purchase shares of Labco stock owned
by the Company in the event that the Company wishes to sell any additional
shares. In connection with such right, the Company agreed to certain
restrictions on the transferability of any Labco stock owned until January 2,
1997.

The right of first refusal and the related restrictions will terminate upon
the first to occur of (a) the sale, within twelve months of the date of the
Agreement, of Labco stock sufficient to give any one person or entity ownership
of 50% or more of the Labco stock, or (b) the change of more than three members
of the Board of Directors of Labco, other than as a result of resignation,
during any twelve month period after the date of the Agreement.

After the transaction described above, the Company retained a 26% ownership
interest in the common stock of Labco and is reporting its remaining interest in
Labco under the equity method of accounting.

F-9
<PAGE> 60

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In the Termination Agreement, the Company and Labco agreed to surrender to
Labco the Retained Shares and to terminate all remaining inter-company
arrangements. In addition, upon the disposition by the Company of at least
250,000 of its shares of Labco common stock, Stanley S. Binder and John J. Harte
will resign their positions with Labco.

The following are the condensed results of operations and condensed balance
sheet for Labco:

CONDENSED RESULTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------- -------------------
1994 1995 1995 1996
------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.................................. $5,941 $6,758 $3,089 $2,971
Costs and expenses........................ 5,797 6,198 2,971 2,893
------ ------ ------ ------
144 560 118 78
Minority interest......................... (76) (302) (63) --
------ ------ ------ ------
Income from operation held for sale....... $ 68 $ 258 $ 55 --
====== ====== ======
Net income................................ $ 78
======
Equity in earnings of Labco............... $ 20
======
</TABLE>

CONDENSED BALANCE SHEET
(IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, -----------
1995
------------ (UNAUDITED)
<S> <C> <C>
Current assets............................................ $1,362 $ 1,301
Property and equipment, net............................... 541 482
Other noncurrent assets................................... 47 52
------ ------
Total assets.................................... $1,950 $ 1,835
====== ======
Current liabilities....................................... $ 908 $ 625
Long-term liabilities..................................... 33 122
Equity.................................................... 1,009 1,088
------ ------
Total liabilities and equity.................... $1,950 $ 1,835
====== ======
</TABLE>

3. INVENTORIES

At December 31, 1994 and 1995, and June 30, 1996, the Company had work in
process of $982,000, $1,010,000 and $1,211,000 and finished goods of $808,000,
$611,000, and $441,000, respectively.

F-10
<PAGE> 61

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT

The major categories of property and equipment are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Owned:
Office equipment.............................. $ 359 $ 350 $ 350
Machinery and equipment....................... 2,856 1,687 1,740
Leasehold improvement......................... 1,012 64 64
------- ------- -------
4,227 2,101 2,154
Accumulated depreciation...................... (3,279) (1,515) (1,596)
------- ------- -------
948 586 558
------- ------- -------
Capital leases:
Machinery and equipment....................... 912 -- --
Accumulated amortization...................... (496) -- --
------- ------- -------
416 -- --
------- ------- -------
Totals................................ $ 1,364 $ 586 $ 558
======= ======= =======
</TABLE>

5. BANK INDEBTEDNESS, OTHER NOTES AND ACCRUED LIABILITIES

The Company's Canadian subsidiary, Barringer Research Ltd. ("BRL"), has a
financing arrangement with the Ontario Development Corporation ("ODC") for a
$730,000 export line of credit. BRL may borrow up to $730,000 on a formula basis
of 90% of export accounts receivable plus 70% of the value of export purchase
orders (subject to a maximum sub-limit of $230,000). The rate of interest is
adjusted quarterly and was 10% at June 30, 1996. At June 30, 1996, the line was
fully utilized.

BRL also has a line of credit financing arrangement with the
Toronto-Dominion Bank ("Bank") that provides up to $730,000 based on eligible
receivables. The rate of interest is Canadian prime plus 1.5% (8% at June 30,
1996). At December 31, 1995, $295,000 was borrowed. At June 30, 1996, BRL had
$250,000 available pursuant to the borrowing formula under this facility. This
facility is guaranteed by the Company.

Commencing in March 1995, BRL had not been in compliance with the
collateral coverage covenant of the loan agreement. The amount of funds borrowed
were in excess of the amount allowed pursuant to the collateral formula. At that
time, the Bank agreed to give BRL approximately six months to comply with this
formula. During this time, the Bank continued to finance BRL's needs. On
September 28, 1995, the Company entered into an agreement ("Agreement") with the
Bank, pursuant to which the Bank agreed that BRL would have until September 30,
1995 to comply with certain amended covenants specified in the Agreement and to
maintain such requirements thereafter. In exchange, the Company agreed to remit
50% of the net proceeds realized on the sale of a portion of its stock in Labco
(see Note 2) to BRL. In addition, the Company agreed to provide the Bank with
additional collateral to secure its advances to BRL, resulting in the pledge of
substantially all the assets of the Company as collateral. At September 30,
1995, BRL was in compliance with such covenants. However, at December 31, 1995
BRL was not in compliance with the minimum working capital requirement and at
January 31 and February 29, 1996 BRL's borrowings under the line of credit
exceeded the amount available thereunder. The Bank notified BRL of such
defaults, and without waiving any other remedies available to it, has charged
BRL an interest rate of 21% on the excess of such allowable borrowings. At June
30, 1996 BRL was not in compliance with the minimum working capital or the
minimum net worth requirements. BRL was in compliance at August 31, 1996,
although, there can be no assurances that

F-11
<PAGE> 62

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

BRL will remain in compliance in the future. Management believes that the Bank
will continue to provide funding consistent with past practices, however, the
Company cannot predict what actions, if any, the Bank may take or as to the
timing thereof.

Accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
DECEMBER 31,
--------------- JUNE 30,
1994 1995 1996
----- ----- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued commissions.................................... $ 404 $ 27 $ --
Accrued other.......................................... 545 696 902
---- ---- ----
$ 949 $ 723 $ 902
==== ==== ====
</TABLE>

6. LONG-TERM DEBT AND OTHER LIABILITIES

Long-term debt consists of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
DECEMBER 31,
--------------- JUNE 30,
1994 1995 1996
----- ----- -----------
(UNAUDITED)
<S> <C> <C> <C>
12 1/2% Convertible subordinated debentures(a)......... $ 300 $ 300 $ 300
Capital leases......................................... 344 -- --
Other(b)............................................... 37 108 113
---- ---- ----
681 408 413
Less: Current portion.................................. (230) (300) (300)
---- ---- ----
$ 451 $ 108 $ 113
==== ==== ====
</TABLE>

- ---------------
(a) The 12 1/2% Convertible Subordinated Debentures were due July 17, 1996 and
were convertible at face amount into common stock any time before maturity
at $32.00 per share (9,375 shares of common stock reserved at June 30,
1996). Under the terms of the Indenture, so long as these debentures were
outstanding, the Company could not pay cash dividends, nor make any payment
on account of the purchase, redemption or other acquisition or retirement of
its capital stock. The 12 1/2% Convertible Subordinated Debentures were
repaid on July 15, 1996 with a portion of the net proceeds from the sale of
$1,000,000 of 6% Convertible Subordinated Debentures due 1997 (see Note 14).

(b) Other long-term liabilities at December 31, 1995 and June 30, 1996
represents rents payable on the Company's Canadian facility.

7. STOCKHOLDERS' EQUITY

Private Offering

On May 9, 1995, the Company completed the private placement of 125 units
priced at $6,000 each for an aggregate sales price of $750,000. Each unit
("Unit") consisted 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 purchasers 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.

On June 30, 1995, the Company completed a private placement in which it
sold 28 similar Units, including 22 Units to 17 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.

F-12
<PAGE> 63

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Due from Officers/Stockholders

In connection with the exercise of options to acquire 190,000 shares of the
Company's Common Stock, two officers of the Company signed full recourse
interest bearing (no interest the first year, prime rate thereafter) unsecured
promissory demand notes aggregating $274,000 under the Company's stock option
exercise program. The loans are repaid with a portion of the proceeds from the
sale of the Common Stock to be received by the employees upon the exercise of
their options. As of June 30, 1996, the notes were still outstanding.

Common Stock Outstanding or Reserved for Issuance

The following table sets forth the number of shares of Common Stock
outstanding as of December 31, 1995 as well as the number of shares of Common
Stock that would be outstanding in the event that all of the options and
warrants are exercised and all series of Convertible Preferred Stock and
Debentures are converted into Common Stock.

<TABLE>
<CAPTION>
COMMON STOCK
OUTSTANDING
EXERCISE, OR
CONVERSION OR RESERVED FOR
OPTION PRICE ISSUANCE
--------------- ------------
<S> <C> <C>
Common stock.......................................... 3,479,131
Convertible subordinated notes........................ $32.00 9,375
Class A convertible preferred stock................... $6.06 27,439
Class B convertible preferred stock................... $6.19 83,147
Stock options(i)...................................... $2.00 to $14.00 234,500
Private placement warrants(ii)........................ $2.00 420,000
Other warrants(iii)................................... $4.00 to $14.23 68,750
---------
Total....................................... 4,322,342
=========
</TABLE>

- ---------------
(i) Stock Options -- Pursuant to the Company's 1990 Stock Option Plan the
Company was authorized to issue both incentive stock options and qualified
stock options. Options granted under the 1990 Stock Option Plan are
exercisable after the expiration of two years from the date of grant until
the expiration of five years after the date of grant. Options are
exercisable only during the optionee's employment with the Company or a
subsidiary of the Company. The Company also was permitted to grant stock
options to consultants as authorized by the Board of Directors. These
options are exercisable at varying times from date of grant and expire five
years from date of grant. No shares are available for issuance under the
1990 Stock Option Plan.

During the six months ended June 30, 1996, the Company issued non-qualified
options to purchase 253,000 shares of the Company's common stock at a price
of $1.00 per share to 20 employees which equaled the fair market value of
the Common Stock on the date of grant. The options issued in 1996 expire on
April 25, 2001 and are exercisable as to 25% of the optioned shares
immediately, 50% after the first year, 75% after the second year and 100%
after the third year. During 1995, the Company issued non-qualified options
to purchase 181,375 shares of the Company's common stock at a price of
$2.00 per share to 20 employees and 5,625 options were canceled. The
options issued in 1995 expire on March 10, 2000 and are exercisable as to
40% of the optioned shares after the first year, 60% after two years, 80%
after the third year and 100% after the fourth year. During 1994 no options
were issued and 6,250 options were canceled. During 1993, the Company
issued options to purchase 13,750 shares of common stock at a price of
$14.00 per share to 6 employees and 25,000 options were canceled.

All outstanding stock options expire between July 17, 1996 and April 25,
2001.

F-13
<PAGE> 64

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ii) Private Placement Warrants

In connection with the Company's private placement (see above) warrants to
purchase 420,000 shares of the Company's common stock at $1.96 per share
were sold to a group of private investors and senior management. The
warrants expire between May 9, 1998 and June 29, 2000.

(iii) Other warrants -- During 1994, 60,600 Class D Warrants and 16,537
Underwriter's Warrants were exercised for an aggregate exercise price of
$165,00, resulting in the issuance of 22,958 shares of common stock and
16,537 Class E Warrants. Both the Class D Warrants and the Class E
Warrants have expired.

In September 1994, the Company issued warrants to purchase 6,250 shares of
the Company's common stock at $5.25 per share to the Ontario Development
Corporation in connection with their increase in the export financing
facility available to the Company's Canadian subsidiary, from $365,000 to
$730,000). See Note 5 for additional information.

On December 31, 1991, the Board of Directors adopted the 1991 Directors
Warrant Plan ("Plan"). Pursuant to the Plan, each non-employee director
will be sold a five-year warrant to purchase 3,750 shares of Common Stock
at an exercise price to be determined by the Board at the time of such
sale, but shall not be less than the current market price for such shares
at the time of issuance of the warrant. During 1994, warrants to purchase
3,750 shares were issued to a director at $9.64 per share, subject to
adjustment. No warrants were issued under the Plan in 1995 or during the
six months ended June 30, 1996.

On April 7, 1995, the Company issued warrants to purchase 6,250 shares of
the Company's common stock at $4.00 per share to Labco in connection with
the extension by Labco of an intercompany obligation, which was
subsequently paid.

All of the other warrants described herein expire between April 1, 1996 and
January 12, 1999.

Increase in Authorized Shares

At the 1995 Annual Meeting of Stockholders, the Company's stockholders
approved an 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. The stockholders also approved a
one for four reverse stock split of the Company's common stock.

8. INCOME TAXES

Effective January 1, 1993 the Company prospectively adopted Financial
Accounting Standards No 109 "Accounting for Income Taxes". The adoption had no
effect on prior year financial statements presented. Accordingly, there was no
cumulative effect adjustment required in the year ended December 31, 1993.

F-14
<PAGE> 65

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision for income taxes (benefits) charged to continuing operations
are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- -------------
1993 1994 1995 1995 1996
----- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current Tax Expense:
U.S.......................................... -- -- -- -- --
Canadian..................................... $ 147 -- -- -- --
----- --- --- --- ----
Total Current............................. 147 -- -- -- --
----- --- --- --- ----
Deferred Tax Expense (Benefit):
Canadian..................................... (300) $75 -- -- --
----- --- --- --- ----
Total Deferred............................ (300) 75 -- -- --
----- --- --- --- ----
Total income tax provision
(benefit).......................... $(153) $75 $ 0 $ 0 $ 0
===== === === === ====
</TABLE>

Deferred tax assets are comprised of the following temporary differences
and carryforwards at December 31:

<TABLE>
<CAPTION>
(IN THOUSANDS)
1994 1995
------- -------
<S> <C> <C>
Nondeductible allowances against trade receivables............... $ 206 $ 15
Nondeductible inventory reserves................................. 133 90
Nondeductible expense accruals................................... 52 50
Depreciation..................................................... 82 50
Other............................................................ 10 10
Tax benefit of U.S. operating loss carry forwards................ 6,552 6,870
Tax benefit of Canadian operating loss and investment credit
carry forwards................................................. 850 790
------- -------
Gross deferred tax assets...................................... 7,885 7,875
Deferred tax assets valuation allowance.......................... (7,660) (7,650)
------- -------
Net deferred tax asset................................. $ 225 $ 225
======= =======
</TABLE>

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 1996
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. During 1995 the Canadian subsidiary
realized tax loss carryforwards of approximately $75,000 with a tax benefit of
approximately $29,000.

F-15
<PAGE> 66

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's income tax provision (benefit) differed from the amount of
income tax determined by applying the applicable statutory U.S. federal income
tax rate to pretax income from continuing operations as a result of the
following:

<TABLE>
<CAPTION>
(IN THOUSANDS)
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income taxes (benefit) computed at the
U.S. statutory rate.................... $ 155 $(821) $(280) $(125) $ 197
U.S. losses for which no tax benefit has
been recognized........................ 315 943 398 125 51
Consolidated subsidiaries outside the
U.S.:
Change in deferred tax asset valuation
allowance........................... (300) 75 (89) -- --
Use of Canadian tax credits and net
operating loss carryforwards to
offset Canadian income net of effect
of U.S./ Canada tax rate
differential........................ (323) (122) (29) -- (248)
----- ----- ----- ----- -----
Provision (benefit) for income taxes..... $(153) $ 75 $ 0 $ 0 $ 0
===== ===== ===== ===== =====
</TABLE>

At December 31, 1995, the Company has net operating loss carryforwards of
approximately $13,152,000 for federal income tax purposes which expire in
varying amounts through 2011. The Company also has Canadian net operating loss
carryforwards of approximately $2,190,000 and research and development
investment tax credits of approximately $730,000 which expire in varying amounts
through 2005.

9. COMMITMENTS

The Company rents facilities, automobiles and equipment under various
operating leases. Rental expenses under such leases amounted to $280,000,
$191,000 and $108,000 for 1995, 1994 and 1993, respectively.

At December 31, 1995, the aggregate minimum commitments pursuant to
operating leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------------------------------------------------
<S> <C>
1996............................................................ $275,000
1997............................................................ 269,000
1998............................................................ 160,000
1999............................................................ 121,000
2000 and thereafter............................................. 545,000
</TABLE>

10. PENSION PLAN

The Company's Canadian subsidiary's defined benefit pension plan, which
covered its Canadian employees, was terminated at December 31, 1993. At the same
time, it established a money purchase plan that is structured after the 401(k)
salary deferral plan available to all U.S. employees and as such, does not
establish any corporate obligation other than a discretionary matching formula
to employee contributions. As a result of the termination, the Company
recognized a gain of $214,000, representing the excess of the Plan's projected
benefit obligation over the accumulated benefit obligation, in 1993 and
recognized an additional gain in 1995 of $172,000, representing the excess of
the Plan's assets over the cost of providing the annuities to the participants
for the value of their termination benefits. This excess will be put into a
money purchase contract

F-16
<PAGE> 67

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and used by the Company to provide for its matching contributions under the new
arrangement. This amount is being carried as a prepaid pension expense asset on
the balance sheet.

The Company maintains a 401(k) salary deferral plan instituted for all U.S.
employees with more than one year of service. As a money purchase plan, it does
not establish any Company liability other than a matching formula to employee
contributions. The aggregate cost of the plan for 1993, 1994 and 1995 and for
the six months ended June 30, 1995 and 1996 was $14,000, $16,000, $15,700,
$8,000 and $9,000, respectively.

11. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

The Company made cash payments for interest of $180,000, $246,000,
$189,000, $150,000 and $107,000 for the three years ended December 31, 1995 and
for the six months ended June 30, 1995 and 1996. Additionally, income taxes of
$123,000 and $3,500 were paid for the years ended December 31, 1993 and 1994.
The Company did not pay income taxes for the year ended December 31, 1995 or for
the six-month periods ended June 30, 1995 and 1996.

In the three years ended December 31, 1995 and for the six months ended
June 30, 1995 and 1996 the Company paid Preferred Stock dividends in the amount
$114,000, $108,000, $82,000, $51,000 and $24,000 in the form of 11,338, 25,291,
65,417, 17,232 and 7,950 shares of common stock, respectively.

12. INFORMATION CONCERNING THE COMPANY'S PRINCIPAL ACTIVITIES

A summary of the Company's continuing operations by geographic area for the
three years ended December 31, and the six months ended June 30, 1995 and 1996
is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues from operations:
United States.................. $ 4,061 $ 1,862 $ 1,867 $ 845 $ 1,394
Canada......................... 6,185 5,593 5,110 2,346 3,690
Europe......................... -- -- 1,599 708 1,590
Eliminations................... (2,476) (1,941) (2,202) (789) (1,662)
------- ------- ------- ------- -------
Totals................. $ 7,770 $ 5,514 $ 6,374 $ 3,110 $ 5,012
======= ======= ======= ======= =======
Income (loss) from continuing
operations:
United States.................. $ (902) $(2,653) $(1,548) $ (247) $ (146)
Canada......................... 1,495 20 270 (190) 577
Europe......................... -- -- 100 81 133
------- ------- ------- ------- -------
$ 593 $(2,633) $(1,178) $ (356) $ 564
======= ======= ======= ======= =======
Identifiable assets:
United States.................. $ 8,982 $ 6,400 $ 4,253 $ 5,568 $ 4,158
Canada......................... 3,890 4,422 6,248 6,394 7,366
Europe......................... -- -- 696 718 1,210
Eliminations................... (3,933) (4,030) (6,462) (6,402) (6,853)
------- ------- ------- ------- -------
Totals................. $ 8,939 $ 6,792 $ 4,735 $ 6,278 $ 5,881
======= ======= ======= ======= =======
</TABLE>

F-17
<PAGE> 68

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Export sales, including sales from Canada to other countries, comprised
43.8% of total revenues and were made primarily to Western Europe, Asia and
Central and South America.

A summary of the Company's continuing operations by principal activity for
the three years ended December 31, 1995 and the six months ended June 30, 1996
is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
RESEARCH
AND CORPORATE
TOTAL ELIMINATION DEVELOPMENT INSTRUMENTS AND OTHER
------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1996 (Unaudited):
Revenues....................... $ 5,012 $ 594 $ 4,329 $ 89
======= ====== ======= =======
Operating Income (loss)........ $ 667 $ (30) $ 1,030 $ (333)
====== ======= =======
Interest expense and other..... (103)
-------
Income before income taxes..... $ 564
=======
Depreciation and
amortization................. $ 75 $ 11 $ 49 $ 15
======= ====== ======= =======
Capital expenditures........... $ 47 -- $ 47 --
======= ====== ======= =======
Identifiable assets............ $ 5,881 $(6,853) $ 240 $ 9,563 $ 2,931
======= ======= ====== ======= =======
1995:
Revenues....................... $ 6,374 $ 1,052 $ 5,250 $ 72
======= ====== ======= =======
Operating income (loss)........ $ (886) $ (311) $ 268 $ (843)
====== ======= =======
Interest expense and other..... (292)
-------
Loss before income taxes....... $(1,178)
=======
Depreciation and
amortization................. $ 362 $ 45 $ 314 $ 3
======= ====== ======= =======
Capital expenditures........... $ 359 $ 10 $ 349 --
======= ====== ======= =======
Identifiable assets............ $ 4,735 $(6,462) $ 275 $ 7,589 $ 3,333
======= ======= ====== ======= =======
1994:
Revenues....................... $ 5,514 $ 298 $ 5,216 --
======= ====== ======= =======
Operating income (loss)........ $(2,469) $ (208) $(1,075) $ (1,186)
====== ======= =======
Interest expense and other..... (89)
-------
Loss before income taxes....... $(2,558)
=======
Depreciation and
amortization................. $ 320 $ 8 $ 280 $ 32
======= ====== ======= =======
Capital expenditures........... $ (491) -- $ (491) --
======= ====== ======= =======
Identifiable assets............ $ 5,003 $(4,030) $ 302 $ 5,486 $ 3,245
======= ====== ======= =======
Identifiable assets -- held for
sale......................... 1,789
-------
Identifiable assets -- per
balance sheet................ $ 6,792
=======
</TABLE>

F-18
<PAGE> 69

BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
(IN THOUSANDS)
RESEARCH
AND CORPORATE
TOTAL ELIMINATION DEVELOPMENT INSTRUMENTS AND OTHER
------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1993:
Revenues....................... $ 7,770 $ 1,009 $ 6,761 --
======= ====== ======= =======
Operating income (loss)........ $ 541 $ (56) $ 1,709 $(1,112)
====== ======= =======
Interest expense and other..... (101)
-------
Income before income taxes..... $ 440
=======
Depreciation and
amortization................. $ 214 $ 20 $ 162 $ 32
======= ====== ======= =======
Capital expenditures........... $ 120 -- $ 116 $ 4
======= ====== ======= =======
Identifiable
assets -- continuing
operations................... $ 7,144 $(3,933) $ 325 $ 6,363 $ 4,389
======= ====== ======= =======
Identifiable assets -- held for
sale......................... 1,795
-------
Identifiable assets -- per
balance sheet................ $ 8,939
=======
</TABLE>

13. FOURTH QUARTER ADJUSTMENTS

During the fourth quarter of 1995, the Company recorded adjustments for
estimated losses on inventories and receivables of approximately $450,000 and
$200,000, respectively. During the fourth quarter of 1994, the Company recorded
adjustments for estimated losses on inventories and receivables of approximately
$800,000 and $515,000, respectively.

14. SUBSEQUENT EVENT

On July 10, 1996, the Company completed the sale of $1,000,000 of its 6%
Convertible Subordinated Debentures, due 1997, in a private transaction to
private investors including members of management. These debentures are due July
9, 1997 and are convertible into shares of the Company's Common Stock at the
rate of $2.75 per share of Common Stock and mature on the earlier of (i) 30 days
after the completion of an underwritten public offering or a private placement
by the Company of its equity securities pursuant to which the Company receives
net proceeds in an aggregate amount in excess of $5,000,000, or (ii) July 9,
1997. Interest is payable semi-annually. A portion of the net proceeds of the
sale of these debentures were used to repay the 12 1/2% Subordinated Convertible
Debentures due 1996 (see Note 6).

F-19
<PAGE> 70
Photo #4

Shows a security agent using a portable Model 400 IONSCAN(R) to check for
explosives in luggage on board a European train.

Photo #5

Shows a security agent using a suction device to obtain samples from a piece of
checked luggage for testing using the Model 400 IONSCAN(R).

Photo #6

Shows a portable Model 400 IONSCAN(R) ready for use on the tarmac at a French
airbase.

<PAGE> 71

- ------------------------------------------------------
- ------------------------------------------------------

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OF COMMON STOCK AND WARRANTS OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
Available Information................. 3
Forward-Looking Statements............ 3
Prospectus Summary.................... 4
Risk Factors.......................... 8
Use of Proceeds....................... 13
Price Range of Common Stock........... 14
Dividend Policy....................... 14
Capitalization........................ 15
Selected Consolidated Financial
Data................................ 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 24
Management............................ 35
Security Ownership of Certain
Beneficial Owners and Management.... 40
Certain Relationships and Related
Transactions........................ 41
Description of Capital Stock.......... 42
Description of Warrants............... 45
Underwriting.......................... 47
Legal Matters......................... 49
Experts............................... 49
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

1,250,000 SHARES OF COMMON STOCK

AND

1,250,000 COMMON STOCK PURCHASE WARRANTS

LOGO

BARRINGER TECHNOLOGIES INC.

------------------------
PROSPECTUS
------------------------

JANNEY MONTGOMERY SCOTT INC.
, 1996

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 72

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Tenth of the Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and Section 10 of the Company's by-laws, as
amended ("By-laws"), provide that the Company shall, to the fullest extent
permitted by law, indemnify each person (including the heirs, executors,
administrators and other personal representatives of such person) against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by such person in connection with
any threatened, pending or actual suit, action or proceeding (whether civil,
criminal, administrative or investigative in nature or otherwise) in which such
person may be involved by reason of the fact that he or she is or was a director
or officer of the Company or is serving any other incorporated or unincorporated
enterprise in any of such capacities at the request of the Company.

Section 145 of the General Corporation Law of the State of Delaware (the
"GCL") permits a corporation, under specified circumstances, to indemnify its
directors, officers, employees or agents against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been judged liable to the corporation unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.

Article Tenth of the Certificate of Incorporation also contains a provision
limiting the personal liability of directors to the fullest extent permitted or
authorized by the GCL or other applicable law. Under the GCL, such provision
would not limit liability of a director for (i) breach of the director's duty of
loyalty, (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violation of law, (iii) payment of dividends or
repurchases or redemptions of stock other than from lawfully available funds, or
(iv) any transactions from which the director derives an improper benefit.

II-1
<PAGE> 73

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table lists the expenses which will be incurred in connection
with the issuance and distribution of the Securities being registered:

<TABLE>
<CAPTION>
EXPENSE
--------
<S> <C>
SEC Registration Fee.............................................. $ 5,543
National Association of Securities Dealers, Inc. Filing Fee....... 2,300
NASDAQ NMS Listing Fee............................................ 42,485
Accounting Fees and Expenses...................................... 75,000
Legal Fees and Expenses........................................... 175,000
Blue Sky Fees and Expenses........................................ 25,000
Printing and Engraving............................................ 110,000
Miscellaneous..................................................... 39,672
--------
TOTAL................................................... $475,000
========
</TABLE>

All of the above amounts, other than the registration fee, are estimates
only. All of the above expenses will be paid by the Company.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the Securities
Act (all share and per share amounts have been adjusted to reflect the
one-for-four reverse stock split of the Company's common stock, $.01 par value
(the "Common Stock") effected on September 25, 1995):

(i) On July 10, 1996 the Company issued an aggregate amount of
$1,000,000 of its 6% subordinated convertible debentures, due 1997 (the
"Debentures") to institutional and private investors and members of
management for an aggregate purchase price of $1,000,000. This transaction
was completed without registration under the Securities Act of the
Debentures or the shares of Common Stock into which such Debentures are
convertible in reliance upon exemptions provided by Section 4(2) of the
Securities Act. There were no underwriters for this issuance.

(ii) On June 30, 1995 the Company issued an aggregate of 28 units,
each unit consisting of 2,500 shares of Common Stock and a five-year
warrant to purchase 2,500 shares of Common Stock at $2.00 per share (a
"Unit"), to private investors and members of management, for an aggregate
purchase price of $168,000. This transaction was completed without
registration under the Securities Act of the shares of Common Stock or the
warrants comprising the Units or the shares of Common Stock underlying the
warrants in reliance upon the exemptions provided by Section 4(2) of the
Securities Act. There were no underwriters for this issuance.

(iii) On May 9, 1995 the Company issued an aggregate of 125 Units and
one three-year warrant to purchase 37,500 shares of Common Stock at $2.00
per share, to two institutional investors, for an aggregate purchase price
of $750,000. This transaction was completed without registration under the
Securities Act of the shares of Common Stock or the warrants comprising the
Units, the shares of Common Stock underlying the warrants included in the
Units, the additional three-year warrant or the shares of Common Stock
underlying the three-year warrant, in reliance upon the exemptions provided
by Section 4(2) of the Securities Act. There were no underwriters for this
issuance.

(iv) At various times between October 1993 and October 1996, the
Company granted stock options to certain employees of the Company covering
an aggregate of 434,375 shares of Common Stock. These grants were exempt
from registration pursuant to Securities Act Release No. 33-6188 (Feb. 1,
1980). No underwriter was involved in these grants.

II-2
<PAGE> 74

ITEM 27. EXHIBITS

The following exhibits are filed as part of this Registration Statement:

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the Company, as amended.(1)
3.2 Bylaws of the Company.(2)
4.1 Form of Warrant Agreement.**
4.2 Form of Warrant to be issued to Janney Montgomery Scott Inc.**
5.1 Opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A.**
10.1 Employment Agreement between Stanley S. Binder and the Company dated as of
July 10, 1989.(3)
10.2 Form of Employment Agreement between Richard S. Rosenfeld and the
Company.**
10.3 Form of Employment Agreement between Kenneth S. Wood and the Company.**
10.4 Consulting Agreement between John J. Harte and the Company dated as of
January 1, 1991.*
10.5 Barringer Resources, Inc. 1990 Stock Option Plan.(4)
10.6 Form of 1995 nonqualified stock option agreement.*
10.7 Form of 1996 nonqualified stock option agreement.*
10.8 Description of 1991 Warrant Plan.*
10.9 Description of Exercise Plan.*
10.10 License Agreement dated February 27, 1989 between Canadian Patents and
Development Limited -- Societe Canadienne Des Brevets Et D'Exploitation
Limite and Barringer Instruments Limited (the "License Agreement"),
Supplement #1 dated March 4, 1991, Assignment of License Agreement, dated
January 2, 1992, to Her Majesty the Queen in Right of Canada, as
Represented By the Minister of National Revenue and Supplemental Letter
Agreement, dated October 7, 1996.*
10.11 Termination Agreement between the Company and Labco dated October 7, 1996.*
10.12 Unit Purchase Agreement and Form of Warrant Agreement by and between the
Company, Special Situations Fund III, L.P. and Special Situations Cayman
Fund, L.P. dated May 9, 1995.(5)
10.13 Form of Subscription Agreement and Form of Warrant Agreement by and between
the Company and certain officers and directors of the Company, dated as of
June 30, 1995.(6)
10.14 Form of Debenture Purchase Agreement dated as of July 10, 1996, by and
between the Company and certain accredited investors.*
10.15 Loan Agreement dated September 20, 1994 by and between Ontario Development
Corporation and Barringer Research Limited.(7)
10.16 Agreement dated September 28, 1995 between the Toronto-Dominion Bank, the
Company and Barringer Research Limited.(8)
10.17 Lease between the Company and Murray Hill Inn Associates dated as of
February 17, 1993.*
10.18 Lease between BRL and Lehndorff Management Limited ("Lehndorff") dated as
of July 27, 1995.*
10.31 Form of Stock Purchase Agreement dated as of November 30, 1992 by and
between the Company and certain accredited investors.(9)
10.33 Stock Purchase Agreement dated as of February 2, 1993 by and between the
Company and Special Situations Cayman Funds, L.P.(9)
10.34 Form of Stock Purchase Agreement dated as of December 13, 1993 by and
between the Company and certain accredited investors.(9)
11 Earnings per share computation for the six months ended June 30, 1996.(10)
21 List of Subsidiaries of the Company.*
</TABLE>

II-3
<PAGE> 75

<TABLE>
<C> <S>
23.1 Consent of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A. (included in
Exhibit 5.1 to this registration statement).**
23.2 Consent of BDO Seidman, LLP, independent certified public accountants.
24.1 Power of Attorney (included on the signature page).*
</TABLE>

- ---------------

* Previously filed.

** To be filed by amendment.

(1) Incorporated by reference to Exhibit 3.1A to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, File No. 0-3207.

(2) Incorporated by reference to Exhibit 3.2A to the Company's Annual Report on
Form 10-K/A-2 for the fiscal year ended December 31, 1994, File No. 0-3207.

(3) Incorporated by reference to Exhibit 10.15 to the Company's Registration
Statement on Form S-1, File No. 33-3162.

(4) Incorporated by reference to Exhibit 10.25 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990, File No. 0-3207.

(5) Incorporated by reference to Exhibit 4.17 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1995, File No. 0-3207.

(6) Incorporated by reference to Exhibit 4.19 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1995, File No. 0-3207.

(7) Incorporated by reference to Exhibit 10.36 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994, File No. 0-3207.

(8) Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed
on October 13, 1995, File No. 0-3207.

(9) Incorporated by reference to the identically numbered Exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1992, File No. 0-3207.

(10) Incorporated by reference to the identically numbered Exhibit to the
Company's Quarterly Report on Form 10-QSB for the quarter ended June 30,
1996, File No. 0-3207.

ITEM 28. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) For the purpose of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act, shall be deemed a part of this
Registration Statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions on
indemnifications, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.

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<PAGE> 76

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and authorizes this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Borough of New Providence, State of New Jersey, on
October 24, 1996.

BARRINGER TECHNOLOGIES INC.

By: /s/ STANLEY S. BINDER

------------------------------------
Stanley S. Binder, President and

Chief Executive Officer

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- -----------------------------------------
<S> <C>
/s/ STANLEY S. BINDER President, Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer) and
Stanley S. Binder Director
* Director
- ---------------------------------------------
John D. Abernathy
* Director
- ---------------------------------------------
Richard D. Condon
* Director
- ---------------------------------------------
John H. Davies
* Director
- ---------------------------------------------
John J. Harte
* Director
- ---------------------------------------------
James C. McGrath
/s/ RICHARD S. ROSENFELD Vice President-Finance, Chief Financial
- --------------------------------------------- Officer
Richard S. Rosenfeld and Treasurer (Principal Accounting
and Financial Officer)
*By: /s/ STANLEY S. BINDER
- ---------------------------------------------
Stanley S. Binder,
Attorney-in-Fact
</TABLE>

II-5
<PAGE> 77

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ---------------------------------------------------------------------------------
<C> <S> <C>
1.1 Form of Underwriting Agreement*..................................
3.1 Certificate of Incorporation of the Company, as amended(1).......
3.2 Bylaws of the Company(2).........................................
4.1 Form of Warrant Agreement**......................................
4.2 Form of Warrant to be issued to Janney Montgomery Scott Inc.**...
5.1 Opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A.**....
10.1 Employment Agreement between Stanley S. Binder and the Company
dated as of July 10, 1989(3).....................................
10.2 Form of Employment Agreement between Richard S. Rosenfeld and the
Company**........................................................
10.3 Form of Employment Agreement between Kenneth S. Wood and the
Company**........................................................
10.4 Consulting Agreement between John J. Harte and the Company dated
as of January 1, 1991*...........................................
10.5 Barringer Resources, Inc. 1990 Stock Option Plan(4)..............
10.6 Form of 1995 nonqualified stock option agreement*................
10.7 Form of 1996 nonqualified stock option agreement*................
10.8 Description of 1991 Warrant Plan*................................
10.9 Description of Exercise Plan*....................................
10.10 License Agreement dated February 27, 1989 between Canadian
Patents and Development Limited -- Societe Canadienne Des Brevets
Et D'Exploitation Limite and Barringer Instruments Limited (the
"License Agreement"), Supplement #1 dated March 4, 1991,
Assignment of License Agreement, dated January 2, 1992, to Her
Majesty the Queen in Right of Canada, as Represented By the
Minister of National Revenue and Supplemental Letter Agreement,
dated October 7, 1996*...........................................
10.11 Termination Agreement between the Company and Labco dated October
7, 1996*.........................................................
10.12 Unit Purchase Agreement and Form of Warrant Agreement by and
between the Company, Special Situations Fund III, L.P. and
Special Situations Cayman Fund, L.P. dated May 9, 1995(5)........
10.13 Form of Subscription Agreement and Form of Warrant Agreement by
and between the Company and certain officers and directors of the
Company, dated as of June 30, 1995(6)............................
10.14 Form of Debenture Purchase Agreement dated as of July 10, 1996,
by and between the Company and certain accredited investors*.....
10.15 Loan Agreement dated September 20, 1994 by and between Ontario
Development Corporation and Barringer Research Limited(7)........
10.16 Agreement dated September 28, 1995 between the Toronto-Dominion
Bank, the Company and Barringer Research Limited(8)..............
10.17 Lease between the Company and Murray Hill Inn Associates dated as
of February 17, 1993*............................................
10.18 Lease between BRL and Lehndorff Management Limited ("Lehndorff")
dated as of July 27, 1995*.......................................
</TABLE>

<PAGE> 78

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ---------------------------------------------------------------------------------
<C> <S> <C>
10.31 Form of Stock Purchase Agreement dated as of November 30, 1992 by
and between the Company and certain accredited investors(9)......
10.33 Stock Purchase Agreement dated as of February 2, 1993 by and
between the Company and Special Situations Cayman Funds,
L.P.(9)..........................................................
10.34 Form of Stock Purchase Agreement dated as of December 13, 1993 by
and between the Company and certain accredited investors(9)......
11 Earnings per share computation for the six months ended June 30,
1996(10).........................................................
21 List of Subsidiaries of the Company*.............................
23.1 Consent of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A.
(included in Exhibit 5.1 to this registration statement)**.......
23.2 Consent of BDO Seidman, LLP, independent certified public
accountants......................................................
24.1 Power of Attorney (included on the signature page)*..............
</TABLE>