<PAGE>
FORM 10-KSBA
[X] ANNUAL REPORT Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to _______________
Commission File Number 0-8241
BARRINGER LABORATORIES, INC.
-----------------------------------------------------
(Name of small business issuer in its charter)
DELAWARE 84-0951626
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15000 WEST 6TH AVENUE, SUITE 300, GOLDEN, COLORADO 80401-5047
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (303) 277-1687
-----------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of Class)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate by check mark if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B is not contained herein, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[X]
The issuer's net sales for its most recent fiscal year ended December 31, 1995
were $6,758,000.
Number of shares outstanding as of March 14, 1996, of Common Stock, $.01 par
value - 1,652,016.
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The aggregate market value of voting stock held by nonaffiliates of the
registrant is $1,751,137 as of March 14, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(A) GENERAL
Barringer Laboratories, Inc., (the "Company") is an analytical services company,
principally engaged in analytical testing for the environmental and mineral
exploration industries (the "Laboratory Business"). The Company was
incorporated under the laws of the State of Delaware on December 1, 1988. As of
October 20, 1993, the Company incorporated a wholly owned Mexican subsidiary,
Barringer Laboratorios de Mexico S.A. de C.V. ("BLM"). The Company's principal
office is located at 15000 West 6th Avenue, Suite 300, Golden, Colorado 80401
(telephone (303) 277-1687). The Company also maintains a laboratory facility in
Reno, Nevada, and minerals sample preparation facilities in Helena, Montana, and
Hermosillo, Sonora, Mexico.
The Company was organized in December, 1988 by Barringer Technologies Inc.
("BTI"), which currently owns approximately 26.2% of the Company's issued and
outstanding voting securities.
In 1994 the Company's sales increased 7.8% from 1993 levels. The Environmental
Division 1994 sales increased by 5.3% from 1993 due to significant sales volume
increases in the Inorganic and Organic labs, partially offset by lower
Radiochemistry laboratory sales. Mineral Division 1994 sales increased 10.9%
from 1993 due to volume increases from two special projects from existing
clients and new sales from Mexico. These increases in sales, along with
production efficiencies in the Inorganic and Organic labs, were sufficient for
the Company to generate net income of $68,000 before income of $76,000 from the
recovery of the contingency reserve, related to the 1992 sale of the Company's
Canadian subsidiary.
During 1995 the Company experienced a $817,000 (13.8%) increase in sales from
1994. The Environmental Division 1995 sales increased $1,322,000 (41.3%) from
1994 due to significant sales volume increases in all labs. This sales volume
increase was primarily
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ITEM 1. DESCRIPTION OF BUSINESS (CONTINUED)
(A) GENERAL (CONTINUED)
the result of a large major project from an existing customer, a major project
from a new customer, and volume increases from existing customers. Mineral
Division 1995 sales decreased $505,000 (18.5%) from 1994 due to lower U.S.
Sales, which decreased $830,000 (31.1%) from 1994. This decrease was a result
of lower existing customer volume in the first five months of 1995 related to
cancellation of drilling projects caused by severe wet weather in the Sierra
Mountains of California and Nevada. Mineral Division Mexico sales in 1995
increased $325,000 from 1994 due to 1994 sales reflecting only four months of
Mexico operations. Due to the overall increase in sales and the production
efficiencies in the Environmental Division labs, the Company generated 1995 net
income of $557,000.
Effective December 13, 1995 the Company purchased 647,238 shares of it Common
Stock from its largest stockholder. For further information concerning the
transaction, see Item 6. "Management's Discussion and Analysis of Plan of
Operation and Results of Operations" herein.
(B) NARRATIVE DESCRIPTION OF THE BUSINESS
The Company was organized in December 1988 to conduct the Laboratory Business
previously conducted by BTI. The Laboratory Business provides
comprehensive laboratory-based analytical services in the United States.
These services include: (a) environmental analytical laboratory services and
(b) geochemical analyses for mineral and hydrocarbon exploration industries.
As of October 20, 1993, the Company incorporated a wholly owned Mexican
subsidiary, Barringer Laboratorios de Mexico S.A. de C.V. ("BLM"), which has a
satellite mineral sample preparation facility in Hermosillo, Sonora, Mexico.
BLM was operational for four months in 1994 and a full year in 1995.
ENVIRONMENTAL ANALYTICAL LABORATORY SERVICES. From its laboratory in Golden,
Colorado, the Company performs analytical testing services for governmental
agencies, engineering consultants and industries involved in environmental
monitoring programs and hazardous waste management. The market for the
Company's services results primarily from its customers' need to comply with
Federal and state regulations that relate to environmental protection and the
management and treatment of hazardous wastes. These customers typically rely on
independent laboratories such as the Company for ongoing analysis and monitoring
of such wastes.
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<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS (CONTINUED)
(B) NARRATIVE DESCRIPTION OF THE BUSINESS (CONTINUED)
The Company provides a comprehensive range of laboratory analyses to detect and
measure chemical contaminants and radioactive materials in samples of soil,
water, air, industrial wastes and effluents, biological materials, and
underground storage tanks. These services are performed principally at the
Company's laboratory in Golden, Colorado.
The types of laboratory testing performed include analysis of samples for such
contaminates as pesticides, herbicides, PCBs and trace metals; hazardous waste
characterization pursuant to the Resource Conservation and Recovery Act of 1976,
as amended (i.e.: characterization with regard to corrosivity, ignitability,
reactivity, toxicity); clinical chemistry testing of body fluids and tissue
analysis for trace metals, organics and radionuclides; and radioactivity
analysis in a wide range of matrices, including water, soils and sediments,
vegetation, produce and animal tissues. In addition, the Company has the
capability to analyze co-contaminated wastes, a combination of hazardous wastes
contaminated with radioactive materials. During 1995, the Company processed in
its environmental lab in Golden over 30,000 samples for approximately 220
customers.
During 1995, the environmental laboratory in Golden experienced a 41.3%
increase in sales from 1994. Approximately 44% of 1995 and 40% of 1994
Environmental sales were directly a result of analytical services provided under
contracts relating to federal government spending on environmental enforcement
and environmental restoration. Due to the uncertainty surrounding the
allocation of funds through the government budgeting process, there is no
assurance that environmental sales resulting from government programs will
continue to increase in the future.
During the first three months of 1996, the Company has experienced a slowdown in
sales due to the continual uncertainty surrounding the allocation of funds
through the government budgeting process. Management of the Company believe
this is only for a short term until the federal government budget is finalized.
MINERAL. The Company conducts its geochemical assays from its Reno mineral
assay laboratory, which is equipped to perform precious metal fire assays,
atomic absorption metal determinations and standard chemical procedures for
mineral analysis. Cyanide leach tests for characterizing the metallurgical
properties of gold ores are also carried out. Data handling in the
laboratory is managed
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by the proprietary Laboratory Information Management System ("LIMS") which
provides customers with direct access to such data as soon as the analysis is
complete. Over 195,000 samples were processed in 1995 in Reno's mineral
laboratory for approximately 85 customers.
The Company has satellite sample preparation facilities in Helena, Montana and
in Hermosillo, Sonora, Mexico.
The mineral assay laboratory experienced an approximately 18% decrease in sales
for 1995 as compared to an approximate 10% sales increase in 1994. This
decrease was due to customers canceling drilling projects in 1995 as a result of
severe wet weather during the first five months in 1995 in the Sierra Mountains
of California and Nevada.
CUSTOMERS. A substantial portion of the Company's sales are made to existing
customers on a repeat basis. The Company's customers include public utilities,
consulting and construction engineers, waste management companies, government
agencies, oil refineries, mining companies and a variety of other industrial
companies. One customer, MK-Ferguson, accounted for approximately 12% and 11%
of the Company's sales in 1995 and 1994, respectively.
COMPETITION. There are many independent analytical testing laboratories
which compete for the environmental and hazardous waste testing business in
the United States. The Company competes with a number of companies which
have significantly greater resources. Many of these laboratories use similar
equipment and processes. Competition is based not only on price, but also on
reputation for accuracy and ability to respond rapidly. In addition, many
industrial companies have their own in-house analytical testing capabilities.
There are, for example, approximately 50 companies currently participating
in the EPA's Contract Laboratory Program. With respect to environmental
testing, most of the Company's competitors are either privately owned or are
a part of a larger organization. Among such competitors which may have
greater resources, financial and other, are Thermo Analytical, Inc., Lockheed
Analytical, and Quanterra Corporation.
BACKLOG. The backlog of orders at December 31, 1995 and 1994 was $1,123,000 and
$1,515,000. Certain contracts in the backlog of orders may be greater than a
year due to customer control over the flow of samples. This is not indicative
of sales in 1996. The level of backlog is not necessarily indicative of trends
in the Company's business because of the objective of fulfilling customer's
service requirements as quickly as possible. The majority of 1995 backlog is
related to government funding. There can be no assurance that these orders will
generate sales.
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EMPLOYEES. As of December 31, 1995, the Company had 95 employees, the majority
of whom were professional or technical staff. Of this total, 91 people were
employed on a full-time basis and there were 4 people employed on a temporary
basis.
None of the Company's employees are represented by any union, and the Company
considers its employee relationships to be satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases office and laboratory space as follows:
<TABLE>
Square Annual Lease
Location Footage Lease Expiration Type
- -------- ------- ------ ---------- ----
<S> <C> <C> <C> <C>
15000 West 6th Avenue, Suite 300 17,800 $174,000 February, 2001 office and analytical
Golden, Colorado services laboratory
5301 Longley Lane 25,500 $191,000 September, 2001 office and analytical
Reno, Nevada services laboratory
5301 Longley Lane, #24 2,420 $ 13,800 February, 1998 storage space
Reno, Nevada
3382 Highway 12 East 3,000 $ 16,200 March, 1997 sample preparation
Helena, Montana laboratory
BoDega 2 Bicada Blvd. 5,000 $ 12,000 January, 1998 sample preparation
Garcia Morales 829-A laboratory
Colonia La Manga De Este Cuidad
Hermosillo, Sonora, Mexico
</TABLE>
The Company believes that the office and laboratory space it currently leases is
adequate for its current operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during the
last quarter of its fiscal year ended December 31, 1995.
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PART II
ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PRICE RANGE OF OUTSTANDING COMMON STOCK
The Company's common stock is traded on the OTC Bulletin Board. It's symbol is
BALB. On December 31, 1995, there were approximately 26 holders of record (both
beneficial and nominee) of the common stock.
The following table sets forth the high and low bid quotations per share of
common stock (symbol BALB) for each quarter of the fiscal years ended December
31, 1995 and 1994 (which represented quotations between dealers as reported by
the NASDAQ National Market System and the OTC Bulletin Board and do not include
retail markup, markdown or commission and may not necessarily represent actual
transactions).
Common Stock
------------
High Low
---- ---
1994 First Quarter $.81 $.66
Second Quarter .81 .51
Third Quarter .56 .51
Fourth Quarter .51 .38
1995 First Quarter $.50 $.37
Second Quarter .31 .31
Third Quarter .63 .25
Fourth Quarter .81 .25
DIVIDEND POLICY
The Company has not paid cash dividends on its Common Stock and does not
anticipate paying cash dividends in the foreseeable future. The payment of
future dividends and the amount thereof will depend upon the Company's earnings,
financial condition, capital requirements and such other factors as the Board of
Directors may consider relevant. The Company is a party to a line-of-credit
agreement equal to 80% of eligible accounts receivable which prohibits the
declaration or payment of cash dividends. This prohibition has the practical
effect of restricting the payment of cash dividends on the Common Stock.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
The following is a breakdown of consolidated operating results for the years
ended December 31, 1995 and 1994.
BARRINGER LABORATORIES, INC.
1995 Operating Results Compared to 1994 Operating Results
Consolidated
-------------------------
Year Ending 12/31
1995 1994
--------------------------
Sales of Services $6,758,000 $5,941,000
Cost of Services Sold 4,666,000 4,456,000
---------- ----------
Gross Profit 2,092,000 1,485,000
Selling, General and
Administrative Expenses 1,425,000 1,361,000
---------- ----------
Operating Profit 667,000 124,000
Other Income (Expense) (102,000) 20,000
---------- ----------
Income before Income Taxes $ 565,000 $ 144,000
---------- ----------
---------- ----------
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1995 COMPARED TO 1994
Sales of services of $6,758,000 reflect a $817,000 (13.8%) increase in sales
compared to 1994 sales of $5,941,000. The Environmental Division experienced an
increase in sales of $1,322,000 (41.3%) due to significant sales volume
increases in all three labs. This sales volume increase was a result of a
large project from an existing customer, a large project from a new customer,
and volume increases from existing customers. Approximately 44% of the
Environmental Division sales were with customers whose contracts are directly
related to environmental enforcement and restoration. As a result of the
uncertainty surrounding the allocation of funds through the fiscal governmental
budgeting process, there is no assurance that the Environmental Division sales
will continue to increase in the future. The Mineral Division sales experienced
a sales decrease of $505,000 (18.5%) from 1994 due to lower U.S. sales, which
decreased $830,000 (31.1%) from 1994. This decrease was a result of lower
existing customer volume in the first five months of 1995 related to
cancellation of drilling projects caused by severe weather in the Sierra
Mountains of California and Nevada. Mineral Division Mexico sales increased
$325,000 from 1994 due to 1994 sales which reflected only four months of Mexico
operation.
Gross profit as a percentage of sales was 31.0% for 1995 compared to 25.0% for
1994. This increase in gross profit was primarily due to the increase in
Environmental Division sales volume, production efficiencies in the
Environmental Division, and fixed costs allocated over a larger sales base.
Selling, general, and administrative expenses of $1,425,000 increased $64,000
(4.7%) from 1994 primarily due to higher selling expenses (payroll, commissions,
and advertising) and higher general and administrative expenses (management
incentives, directors fees, and professional fees).
Net other expenses totaled $102,000 in 1995 compared to net 1994 other income of
$20,000. 1995 expenses included strategic alliance expenses of $45,000, and
translation loss of $28,000, offset by higher interest income and lower interest
expense. 1994 income included $76,000 from the net recovery of a contingency
reserve.
Income before income taxes was $565,000 in 1995 an increase of $421,000 from
1994 income of $144,000. This increase was primarily due to higher sales,
production efficiencies, fixed costs allocated over a larger sales base, higher
interest income, and lower interest expenses. These increases were offset by
higher selling, general, and administrative expense, non-recurring charge of
$20,000, strategic alliance expense of $45,000, translation loss of $28,000, and
the recovery of the contingency reserve of $76,000, which occurred in 1994.
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1995 COMPARED TO 1994 (CONTINUED)
CAPITAL RESOURCES AND LIQUIDITY
Cash totaled $170,000 at December 31, 1995, compared with $39,000 at December
31, 1994. The $131,000 increase in cash resulted from cash provided by
operating activities of $905,000, offset by cash used in investing activities of
$200,000 and by cash used in financing activities of $574,000.
Cash provided by operating activities resulted from net income of $557,000 for
the year and the effect of certain items not affecting cash of $591,000
(primarily depreciation and amortization) offset by an increase in operating
assets net of operating liabilities of $243,000.
Cash used for investing activities was for the purchase of property and
equipment consisting of $70,000 of lab equipment, $60,000 of vehicles, and
$70,000 of computer hardware and software to upgrade the Laboratory Information
Management System (LIMS).
Cash used in financing activities of $574,000 was used to reduce long term debt
in 1995 of $308,000 and used to purchase treasury stock for $346,000, offset by
an increase in short term borrowings of $80,000.
Effective December 13, 1995 under an agreement dated December 8, 1995, Barringer
Laboratories, Inc. (the "Company") purchased from Barringer Technologies, Inc.
(BTI") 647,238 shares of the Company's common stock for $809,048, which
consisted of a cash payment of $300,000 and cancellation of intercompany
obligations in the amount of $509,048. Additionally, 88,260 shares of the
Company's Common Stock owned by BTI were placed in an escrow account, which will
be returned to BTI if the Company's 1996 earnings are at least 13% higher than
1995 earnings. If these earnings are not met, then the 88,260 shares will
revert to the Company. Therefore, the effective purchase price per share would
go from $1.25 down to $1.10. See Note 2 of the Notes to the Consolidated
Financial Statements.
The Company currently has a working line of credit from a lending institution.
This line of credit availability is equal to 80% of the Company's eligible
accounts receivable and can be canceled with a thirty day advance notice. This
line of credit is funding the Company's current working capital requirements and
has also been used to guarantee a $150,000 letter of credit required by the
Colorado Department of Health, as a financial assurance requirement, to increase
the level of the Company's Radiochemistry License. This increase in the license
gives the Company the ability to grow the radiochemistry analytical business.
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1995 COMPARED TO 1994 (CONTINUED)
CAPITAL RESOURCES AND LIQUIDITY (CONTINUED)
Subsequent to December 31, 1995, the Company has entered into additional capital
lease obligations requiring total payments of $199,000 through 1998.
Management of the Company believes that additional capital is required to fund
the expansion of its environmental and mineral services business and to improve
overall Company liquidity. Management is currently evaluating potential funding
sources to obtain additional debt or equity financing. Should the receipt of
additional funding be delayed, the continued growth of the Company's business
may be negatively impacted.
INCOME TAXES AND NET OPERATING LOSS CARRYFORWARDS
The Company's effective tax rate differs materially from the Federal statutory
rate of 34% as discussed in the notes to the accompanying consolidated financial
statements.
As of December 31, 1995, the Company has net operating loss carryforwards of
$4,230,000 available to offset future taxable income. Such operating loss
carryforwards expire through 2006.
As of December 31, 1995, a valuation allowance equal to the net deferred asset
recognized was recorded as determined that it is more likely than not that the
deferred tax asset will not be realized.
INFLATION
Inflation was not a material factor in either the sales or the operating
expenses of the Company during the two year period ended December 31, 1995.
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1995 COMPARED TO 1994 (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued SFAS No. 121,
"Accounting for the Impairment of Long-Lives Assets" and SFAS No. 123,
"Accounting for Stock Based Compensation". SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles be reported at the
lower of the carrying amount or their estimated recoverable amount and the
adoption of this statement by the Company is not expected to have an impact
on the financial statements. SFAS No. 123 encourages the accounting for
stock-based employee compensation programs to be reported within the
financial statements on a fair value based method. If the fair value based
method is not adopted, then the statement requires proforma disclosure of net
income and earnings per share as if the fair value based method had been
adopted. The Company has not yet determined how SFAS No. 123 will be adopted
nor its impact on the financial statements. Both statements are effective
for fiscal years beginning after December 15, 1995.
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ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Barringer Laboratories, Inc.
Golden, Colorado
We have audited the accompanying consolidated balance sheets of Barringer
Laboratories, Inc. and subsidiary as of December 31, 1995 and 1994 and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the years then ended. 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
Laboratories, Inc. and subsidiary at December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the years then ended in
conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Denver, Colorado
March 6, 1996
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BARRINGER LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
---- ----
Sales of Services (Note 8) $6,758,000 $5,941,000
Cost of Services Sold 4,666,000 4,456,000
---------- ----------
Gross Profit 2,092,000 1,485,000
Selling, General and
Administrative Expenses 1,425,000 1,361,000
---------- ----------
Operating Profit 667,000 124,000
---------- ----------
Other Income (Expense):
Interest income 69,000 56,000
Interest expense (80,000) (96,000)
Translation loss (28,000) -
Recovery of Contingency Reserve - 76,000
Other (63,000) (16,000)
---------- ----------
Total Other Income (Expense) (102,000) 20,000
---------- ----------
Income before Income Taxes 565,000 144,000
Provision for Income Taxes
(Note 5) 8,000 -
---------- ----------
Net Income $ 557,000 $ 144,000
---------- ----------
---------- ----------
Per Share Data:
Net Income per share $ .25 $ .06
---------- ----------
---------- ----------
Weighted average common
shares outstanding 2,267,335 2,244,456
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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BARRINGER LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
-------------------
1995 1994
---- ----
Assets (Note 3)
Current Assets:
Cash $ 170,000 $ 39,000
Trade receivables, less
allowance of $21,000 and
$17,000 for doubtful accounts 1,078,000 777,000
Due from affiliate (Note 2) 1,000 34,000
Prepaid expenses and other 113,000 69,000
---------- ----------
Total Current Assets 1,362,000 919,000
---------- ----------
Property, Plant and Equipment:
Machinery and equipment 1,677,000 1,455,000
Machinery and equipment under
capital lease obligations 472,000 895,000
Leasehold improvements 639,000 638,000
Office furniture and equipment 62,000 62,000
---------- ----------
2,850,000 3,050,000
Less accumulated depreciation and
amortization 2,309,000 2,273,000
---------- ----------
Net Property, Plant and Equipment 541,000 777,000
Note Receivable from Affiliate
(Note 2) - 452,000
Other Assets 47,000 93,000
---------- ----------
Total Assets $1,950,000 $2,241,000
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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BARRINGER LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
--------------------
1995 1994
---- ----
Liabilities and Shareholders' Equity
Current Liabilities
Line of Credit (Note 3) $ 84,000 $ 4,000
Trade accounts payable 235,000 215,000
Accrued liabilities:
Payroll, compensation and
related expenses 239,000 184,000
Other 203,000 166,000
Current maturities of long-term debt
(Note 4) 150,000 230,000
---------- ----------
Total Current Liabilities 911,000 799,000
Long-Term Debt, less current maturities
(Note 4) 33,000 151,000
---------- ----------
Total Liabilities 944,000 950,000
---------- ----------
Commitments (Notes 4 and 7)
Shareholders' Equity (Note 6)
Preferred stock, $2.00 par value,
1,000,000 shares authorized;
none issued - -
Common stock, $0.01 par value,
shares authorized, 10,000,000;
issued 2,299,254 and 2,299,254;
outstanding 1,652,016 and
2,299,254 23,000 23,000
Additional paid-in capital 3,278,000 3,278,000
Accumulated deficit (1,425,000) (1,982,000)
Translation Adjustment (15,000) (28,000)
---------- ----------
1,861,000 1,291,000
Less common stock in treasury,
at cost, 647,238 shares (Note 2) (855,000) -
---------- ----------
Total Shareholders' Equity 1,006,000 1,291,000
---------- ----------
Total Liabilities and
Shareholders' Equity $1,950,000 $2,241,000
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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BARRINGER LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN 000'S EXCEPT SHARE DATA)
Years Ended December 31, 1995 and 1994
<TABLE>
Subscription
Notes
Common Stock Treasury Stock Additional Receivable
---------------- --------------- Paid-In & Deferred Accumulated Translation
Shares Amount Shares Amount Capital Compensation Deficit Adjustment Total
------ ------ ------ ------ -------- ------------ ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 2,242,816 $ 22 - $ - $ 3,256 $ (17) $(2,126) $ - $1,135
Issuance of Common Stock 106,438 1 - - 62 - - - 63
Collections on Subscription
Notes receivable - - - - - 17 - - 17
Retirement of Common Stock (50,000) - - - (40) - - - (40)
Translation Adjustment - - - - - - - (28) (28)
Net Income for the Year - - - - - - 144 - 144
--------- ---- --------- ----- ----- ---- -------- ------ ------
Balance at December 31, 1994 2,299,254 23 - - 3,278 - (1,982) (28) 1,291
Purchase of Treasury
Stock (Note 2) - - 647,238 (855) - - - - (855)
Translation Adjustment - - - - - - - 13 13
Net Income for Year - - - - - - 557 - 557
--------- ---- --------- ----- ----- ---- -------- ------ ------
Balance at December 31, 1995 2,299,254 $ 23 647,238 $(855) $3,278 $ - $(1,425) $ (15) $1,006
--------- ---- --------- ----- ----- ---- -------- ------ ------
--------- ---- --------- ----- ----- ---- -------- ------ ------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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BARRINGER LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the year $ 557,000 $ 144,000
Items not affecting cash
Depreciation and amortization 565,000 528,000
Deferred compensation expense - 13,000
Bad debt expense 13,000 12,000
Other 13,000 (21,000)
Increase in operating assets net
of operating liabilities (243,000) (296,000)
---------- ----------
Cash Provided by Operating
Activities 905,000 380,000
---------- ----------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (200,000) (218,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of Treasury Stock (346,000) -
Reduction in long-term debt (308,000) (328,000)
Increase in short-term borrowings 80,000 4,000
Other - 30,000
Receipt of principal from parent
note receivable - 136,000
---------- ----------
Cash Used in Financing
Activities (574,000) (158,000)
---------- ----------
Increase in cash 131,000 4,000
Cash-beginning of year 39,000 35,000
---------- ----------
Cash-end of year $ 170,000 $ 39,000
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
-18-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
INCREASE (DECREASE) IN CASH
Year Ended December 31,
-----------------------
1995 1994
---- ----
Decrease (increase) in operating
assets net of operating liabilities
Trade receivables $(314,000) $(128,000)
Due from affiliate (42,000) (62,000)
Other current assets (44,000) 13,000
Other assets 27,000 (9,000)
Accounts payable and accrued
liabilities 130,000 (110,000)
---------- ----------
Total - net $(243,000) $(296,000)
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
-19-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Barringer Laboratories, Inc., (the "Company") is an analytical services company,
principally engaged in analytical testing for the environmental and mineral
exploration industries.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements comprise the accounts of the
Company and its wholly owned Mexican subsidiary. All intercompany balances and
transactions have been eliminated.
PRINCIPAL MARKETS
Sales of services are primarily to customers located in the United States, with
the balance to customers in Mexico and Europe. For the year ended December 31,
1995 based upon total sales, 44% of the Company's Services were provided under
contracts relating to federal government spending for environmental enforcement
and restoration.
PRINCIPLES OF TRANSLATION
Assets and liabilities of the Company's Mexican subsidiary 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 shareholders' equity until a foreign business is sold or
substantially liquidated. Assets and revenues of the Company's Mexican
subsidiary comprise less than 10% of total consolidated assets and revenues.
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 due to the large number
of customers, generally short payment terms, and their dispersion across
geographic areas. See Note 8.
-20-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
USE OF ESTIMATES
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in the
accompanying financial statements. Actual results could differ from those
estimates.
PROPERTY, PLANT, EQUIPMENT AND DEPRECIATION
Property, plant 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. Equipment under capital leases is amortized on a
straight-line basis over the term of the lease, generally three to five
years, which approximates the estimated useful lives of the leased equipment.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS No. 109"). Temporary differences are differences
between the tax basis of assets and liabilities and their reported amounts in
the financial statements that will result in taxable or deductible amounts in
future years.
REVENUE RECOGNITION
Sales are recorded in the periods that services are performed.
STATEMENTS OF CASH FLOWS
For purposes of the Statements of Cash Flows, the Company considers cash and all
highly liquid investments with an original maturity of three months or less to
be cash and cash equivalents.
INCOME PER SHARE
Income per share is based upon the weighted average number of common shares
outstanding during the period. Warrants and options are not included in the
calculation of income per share as their computed affect would be anti-dilutive.
-21-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets" and SFAS No. 123, "Accounting for Stock
Based Compensation". SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles be reported at the lower of the carrying
amount or their estimated recoverable amount and the adoption of this
statement by the Company is not expected to have an impact on the financial
statements. SFAS No. 123 encourages the accounting for stock-based employee
compensation programs to be reported within the financial statements on a
fair value based method. If the fair value based method is not adopted, then
the statement requires proforma disclosure of net income and earnings per
share as if the fair value based method had been adopted. The Company has
not yet determined how SFAS No. 123 will be adopted nor its impact on the
financial statements. Both statements are effective for fiscal years
beginning after December 15, 1995.
2. ACQUISITION OF TREASURY STOCK
Effective December 13, 1995 under an agreement dated December 8, 1995, Barringer
Laboratories, Inc. (the "Company") purchased from Barringer Technologies, Inc.
("BTI") 647,238 shares of the Company's common stock for $809,000, which
consisted of a cash payment of $300,000 and cancellation of intercompany
obligations (note and intercompany Account Receivable) in the amount of
$509,000. Additionally, the Company incurred $46,000 in professional fees
relating to this stock transaction. Under the terms of the agreement 88,260
shares of the Company's Common Stock owned by BTI were placed in an escrow
account, which will be returned to BTI if the Company's 1996 earnings are at
least 13% higher than 1995 earnings. If these earnings are not met, then the
88,260 shares would revert to the Company. Therefore, the effective purchase
price per share would go from $1.25 down to $1.10. BTI has agreed not to
transfer its remaining 26% interest in BLI until January 2, 1997, subject to
certain conditions, and has agreed to grant BLI a right of first refusal with
respect to such shares until January 2, 1997, subject to certain conditions.
The Intercompany Agreement previously existing between the Company and BTI was
terminated on December 13,1995. BTI agreed to terminate all voting trusts,
proxy
-22-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. ACQUISITION OF TREASURY STOCK (CONTINUED)
arrangements, and all other arrangements and agreements of any kind or nature
under which it was authorized to vote shares of the Company. BTI further agreed
not to enter into any future voting trusts, proxy agreements, and any other
agreements relating to shares of the Company for the next twenty-four (24)
months. The common stock purchased by the Company and total transaction value
of approximately $855,000 was recorded as Treasury stock.
3. LINE OF CREDIT
The Company has a working line of credit from a lending institution. This line
of credit is equal to 80% of the Company's eligible accounts receivable. The
line of credit can be canceled with a thirty day advance notice. This line of
credit bears interest, payable monthly, at a floating rate of prime plus 10%
(18.5% at December 31, 1995) with a minimum monthly charge of $2,500. The
Company has pledged its accounts receivable, inventory, equipment and fixtures
and intangibles as collateral for the debt.
This line of credit borrowing includes a $150,000 irrevocable letter of credit
issued on behalf of the Company to the Colorado Department of Health to allow
for an increase in the Company's regulated radiochemistry laboratory license.
As of December 31, 1995 $84,000 was outstanding under this line of credit
agreement. During the year ended December 31, 1995, the average amount
outstanding under this line of credit agreement was $66,000, and the weighted
average interest rate was 33.8%. The interest rate was calculated by dividing
the applicable interest expense, including minimum charge of $2,500, by the
average outstanding balance. The maximum amount borrowed under this agreement
during the year ended December 31, 1995 was $179,000.
-23-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. LONG-TERM DEBT
Long-term debt consists of the following:
December 31,
--------------------
1995 1994
---- ----
Obligations under capital leases (a) $167,000 $344,000
Other installment obligations 16,000 37,000
-------- --------
183,000 381,000
Less current maturities 150,000 230,000
-------- --------
$ 33,000 $151,000
-------- --------
-------- --------
(A) CAPITAL LEASES
As of December 31, 1995 future net minimum lease payments under capital lease
obligations are as follows:
1996 $154,000
1997 33,000
--------
Total minimum lease payments 187,000
Less amounts representing interest 16,000
Less amounts representing executory costs 4,000
--------
Present value of net minimum lease payments $167,000
--------
--------
At December 31, 1995 and 1994 the net book value of equipment under capital
lease obligations was $174,000 and $409,000.
Subsequent to December 31, 1995, the Company has entered into additional capital
lease obligations requiring total payments of $199,000 through 1998.
-24-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. INCOME TAXES
Sources of income (loss) before income taxes include:
1995 1994
---- ----
United States operations $ 585,000 $ 168,000
Mexico operations (28,000) (24,000)
---------- ----------
$ 557,000 $ 144,000
---------- ----------
---------- ----------
The provision for income taxes for the years ended December 31, consisted
of the following:
1995 1994
---- ----
Current:
Federal $ 8,000 $ -
State - -
Deferred:
Federal 179,000 106,000
State 16,000 9,000
-------- ---------
203,000 115,000
Decrease in valuation allowance (195,000) (115,000)
-------- ---------
$ 8,000 $ -
-------- ---------
-------- ---------
The significant components of deferred income tax expense consisted of the
following:
1995 1994
---- ----
Utilization of net operating
loss carryforward $ 263,000 $ 124,000
Expense accruals 21,000 41,000
Depreciation and amortization (47,000) (48,000)
Other (42,000) (2,000)
-------- ---------
Deferred income tax expense $ 195,000 $ 115,000
-------- ---------
-------- ---------
-25-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
RECONCILIATION OF INCOME TAXES
The following summary reconciles income taxes at the United States statutory
rate of 34% in 1995 and 1994 with the actual taxes:
1995 1994
---- ----
Expense computed
at the statutory rate $ 192,000 $ 49,000
Losses for which no tax
benefits has been recognized 10,000 8,000
Non-deductible amortization of
deferred compensation - 4,000
Valuation allowance (195,000) (115,000)
Other 1,000 54,000
---------- ----------
Provision for income taxes $ 8,000 $ -
---------- ----------
---------- ----------
Temporary differences between the financial statement carrying amounts and the
tax basis of assets and labilities that give rise to significant portions of the
net deferred tax asset relate to the following:
1995 1994
---- ----
Tax operating loss carryforwards $1,565 000 $1,828,000
Property and equipment, principally
due to differences in depreciation 129,000 82,000
Expense accruals 31,000 52,000
Other 52,000 10,000
----------- -----------
1,777,000 1,972,000
Valuation allowance (1,777,000) (1,972,000)
----------- -----------
$ - $ -
----------- -----------
----------- -----------
As of December 31, 1995 a valuation allowance equal to the net deferred tax
asset recognized has been recorded, as Management of the Company is not able to
determine that it is more likely than not that the deferred tax asset will be
realized.
At December 31, 1995, the Company has unused net operating loss carryforwards of
approximately $4,230,000 available to offset future years United States Federal
taxable income. Such carryforwards expire in varying amounts from 1996 to 2006
and are subject to certain limitations under the Internal Revenue Code of 1986,
as amended.
-26-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. SHAREHOLDERS' EQUITY
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 outstanding options and warrants are
exercised.
Exercise BLI Common Stock
Conversion or Outstanding or
Security Option Price Reserved for Issuance
- ------------------- ------------- ---------------------
Common Stock 1,652,016
Stock Options (a) $ .90 119,000
Warrants (b)
BTI's Warrants expiring
five years after issuance $1.00 7,500
---------
1,778,516
---------
---------
(A) STOCK OPTIONS
1989 STOCK OPTION PLAN
The 1989 Stock Option Plan (the "Plan") is designed to provide incentives for
employees who may or may not be key employees, as well as officers and directors
who are also employees of the Company and its subsidiary, by providing up to
200,000 shares of the Company's common stock issuable pursuant to grants.
-27-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. SHAREHOLDERS' EQUITY (CONTINUED)
(A) STOCK OPTIONS (CONTINUED)
1989 STOCK OPTION PLAN (CONTINUED)
The Plan is administered by a Committee of at least three directors appointed
by the Board of Directors. The Committee is authorized to determine the
individuals to who, and the times at which, options will be granted, the
number of shares to the subject to each grant, the applicable restriction
period, the purchase price for the shares subject to the option, and specify
such other terms and provisions of any grants of options as it deems
necessary or advisable. However, the term of the options may not be for more
than five years and the purchase price per share shall not be less than the
market value of such shares at the time of grant. Additionally, the optionee
must remain in the continuous employ of the Company or its subsidiary for a
period of two years from the date of grant before any part of the option may
be exercised.
The Plan will terminate in December 1999, except for outstanding options under
the Plan, which will remain in effect until they have been exercised or shall
have been expired by their terms.
OTHER STOCK OPTIONS
The Company also grants stock options to management and its outside directors 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. As of
December 31, 1995 all other stock options have been granted at an exercise price
in excess of the current market value at the time of grant.
(B) WARRANTS
BTI's warrants were given to BTI as an incentive for pre-payment of its note
receivable. Each warrant is exercisable for a period of five years after date
of issue and entitles BTI to purchase one share of common stock.
-28-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(B) WARRANTS (CONTINUED)
Options Exercise
and Price Per
Warrants Share
-------- ---------
January 1, 1995 178,500 $ .90-1.00
Expired in 1995 (52,000) $ .90
-------- ----------
December 31, 1995 126,500 $ .90-1.00
-------- ----------
-------- ----------
Subsequent to December 31, 1995, the Board of Directors granted additional
options to certain officers and employees to purchase 80,000 shares of the
Company's common stock at $1.00 per share. As of March 6, 1996, the Board of
Directors also approved the issuance of stock options to outside directors of
the Company to purchase up to 50,000 shares of the Company's common stock at
$1.00 per share. No options have been exercised pursuant to the plan.
Subsequent to December 31, 1995, the Board of Directors of the Company approved
options, which will be granted monthly for 24 months, to an outside consultant
to purchase up to 60,000 shares of the Company's common stock at $1.00 per
share. This option agreement can be canceled by the Company upon a 30 day
written notice.
PREFERRED STOCK
The Preferred Stock of the Company can be issued in series. With respect to
each series issued, the Board of Directors of the Company will determine, among
other things, the number of shares in the series, voting rights and terms,
dividend rates and terms, liquidation preferences and redemption and conversion
privileges. There was no preferred stock outstanding at December 31, 1995.
-29-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7. COMMITMENTS
The Company rents office and laboratory facilities, and equipment under various
operating leases. Total rental expenses under such leases amounted to $385,000
and $391,000 for each of the two years ended December 31, 1995 and 1994. At
December 31, 1995 future minimum rental payments required under operating leases
that have initial or remaining noncancellable terms in excess of one year are as
follows:
Year ending December 31, 1996 $ 462,000
1997 320,000
1998 275,000
1999 227,000
2000 54,000
----------
$1,338,000
----------
----------
Subsequent to December 31, 1995 the Company extended its facility lease in Reno,
Nevada for an additional five years at approximately $17,000 per month.
8. MAJOR CUSTOMER
Sales to one customer totalling approximately $825,000 and $641,000 accounted
for 12% and 11% of total sales and in 1995 and 1994.
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The Company made cash payments for interest of $80,000 and $96,000 in 1995 and
1994, respectively.
The Company made cash payments of $5,000 for income taxes in 1995 and no cash
payments for income taxes in 1994.
The Company acquired $110,000 and $144,000 of equipment under capital lease
obligations in 1995 and 1994, respectively.
In 1995 the Company acquired certain treasury stock in exchange for the
cancellation of intercompany obligations of $509,000.
-30-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART II (CONTINUED)
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND CONSOLIDATED FINANCIAL DISCLOSURE
Not applicable.
-31-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Position with the Company Director
Name and affiliates Since
---- ------------------------- --------
Robert H. Walker........ Director, President and 1990
Chief Executive Officer
of the Company
Anthony R. Barringer.... Director of the Company 1991
John J. Harte........... Director and Chairman of the 1989
Board of the Company;
Director and Vice President of
Barringer Technologies Inc.
Stanley S. Binder....... Director of the Company, 1989
Director, President and Chief
Executive Officer of Barringer
Technologies Inc.
Randolph H. Ware........ Director of Company 1991
C.F. Wasser, III........ Director of Company 1991
Vern K. Peterson........ Vice President --
Charles E. Ramsay....... Secretary, Treasurer, and --
Chief Financial Officer of
the Company
Robert H. Walker, 48, joined the Company as President and Chief Executive
Officer effective February 26, 1990 and became a Director on March 31, 1990.
From June, 1989 to February 26, 1990, Mr. Walker was Vice President
Marketing/Sales for DataChem Laboratories, Inc. From 1988 to 1989, he was
Executive Vice President Marketing/Sales for Hager Laboratories, Inc. From 1987
to 1988, Mr. Walker was Business Affairs Officer for Veterans for the U.S. Small
Business Administration and from 1984 to 1987 he was President and Chief
Executive Officer of Corpex, Inc., an environmental firm. He has a B.A. in
Business Administration from the University of Southern Colorado and a Master's
degree in Public Administration from the University of Colorado.
-32-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT.)
Dr. Anthony R. Barringer, 70, is a Director of the Company and the founder of
Barringer Technologies, Inc. (BTI) for which he was President and later served
as Chairman until he resigned in January, 1993, and Chief Executive Officer
until January, 1989. Since November, 1989, Dr. Barringer has been the principal
officer of Barringer Patents Inc., a technology development firm not in
competition with the Company. Dr. Barringer is also Chairman of Barringer
GeoSystems Inc., a company formed in August, 1994 for the development of
airborne geophysical systems. This firm is not in competition with the Company.
John J. Harte, 54, is a Director and Chairman of the Board of the Company, and a
Vice President and a Director of BTI, 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.
Stanley S. Binder, 54 is a Director of the Company. He is also a Director and
the President and Chief Executive Officer of BTI. From 1977 to May 1989, Mr.
Binder served as Chief Financial Officer for Keystone Camera Products Corp.,
Clifton, New Jersey, and its predecessors. In January, 1991, Keystone Camera
Products Corporation filed for protection under Chapter #11 of the U.S.
Bankruptcy Laws.
Dr. Randolph H. Ware, 51, is a Director of the Company. Dr. Ware is founder
of the Boulder Brewing Company (1980), now the Rockies Brewing Company, 23rd
largest U.S. beer producer; Radiometrics Inc. (1987), a developer and
manufacturer of atmospheric remote sensing equipment; and UNAVCO (1984), a
63-university consortium funded by the National Science Foundation and NASA
to make scientific use of the Global Positioning System (GPS) satellites. He
now serves as a Director of UNAVCO, and as Chairman of Radiometrics Inc.
-33-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT.)
C.F. Wasser, III, 44, is a Director of the Company. From December, 1982 to
January, 1993, Mr. Wasser was Senior Vice President of Sales for Kidder Peabody
& Co., Inc. in Minneapolis, Minnesota. He served as a Senior Vice President for
Paine Webber in Wayzata, Minnesota from January, 1993 to October 1995.
Effective October 1995, Mr. Wasser became Senior Vice President - Investments
for EVEREN Securities, Inc. in Minneapolis, Minnesota.
Vern K. Peterson, 43, is a Vice President of the Company and manager of its
Minerals Division. He joined the Company in 1985. From 1982 to 1985, he was a
Laboratory Manager of Shasta Analytical Inc. Mr. Peterson was a business major
at Valley College and Glendale College and has over 17 years of business
management experience, the last 12 years of which involved managing
laboratories.
Charles E. Ramsay, 50, is the Chief Financial Officer, Treasurer and Secretary
of the Company. Effective January 25, 1994, Mr. Ramsay became the Chief
Financial Officer and Treasurer of the Company. Since February 1991, Mr. Ramsay
has also been the Secretary of the Company. Mr. Ramsay was Controller from
August, 1989 to January, 1994. From 1985 until December, 1988, Mr. Ramsay was
the Vice President of Finance for Denver Wood Products, a distributer of lumber
and home building products. From January 1, 1989 until joining the Company in
August 1989, Mr. Ramsay was a consultant.
All six (6) directors are elected by the holders of the Company's Common Stock
to serve one year terms or until their successors shall be elected and shall
qualify.
There are no family relationships between any of the directors and officers of
the Company.
-34-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the total renumeration, on an accrued basis,
during the Company's last fiscal year ended December 31, 1995 for the only
executive officer whose total cash and non-cash compensation exceeded $100,000
and for his prior two years renumeration.
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
---------------------------- -------------------- --------
Other
Annual Restricted
Name and Compen- Stock LTIP All Other
Principal sation Award(s) Option/ Payouts Compensation
Position Year(1) Salary($) Bonus($) ($) ($) SARs(#)(2) ($) ($)(3)
- --------- ------- --------- -------- ------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert H. Walker 1995 108,212 31,312 N/A N/A - N/A 13,596
President and 1994 104,500 16,000 N/A N/A 10,000 N/A 13,644
C.E.O. 1993 100,846 - N/A N/A - N/A 13,478
</TABLE>
(1) Periods presented are for the year ended December 31.
(2) Number of Shares of Common Stock subject to options granted during the year
indicated.
(3) Represents employer contributions for insurance, disability, 401K and a car
allowance.
Mr. Walker's salary for fiscal year 1996 is $111,800. Bonuses for Mr. Walker
and other individuals are determined by the Compensation Committee of the Board
of Directors based on overall Company performance.
For fiscal year 1995 no options or stock appreciation rights were granted to Mr.
Walker.
-35-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 10. EXECUTIVE COMPENSATION (CONTINUED)
AGGREGATE OPTIONS EXERCISED IN 1995 AND OPTION VALUES AT DECEMBER 31, 1995.
The following table sets forth certain information regarding options to purchase
shares of Common Stock exercised during the Company's 1995 fiscal year and the
number and value of exercisable and unexercisable options to purchase shares of
Common Stock held as of the end of the Company's 1995 fiscal year by the
executive officer of the Company named in the Summary Compensation Table:
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End(#) FY-End($)
--------------- ---------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized($)(1) Unexercisable Unexercisable(2)
---- --------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Robert H. Walker 0 0 0/45,000 $0/$0
</TABLE>
(1) Value realized is equal to the difference between the fair market value per
share of Common Stock on the date of exercise and the option exercise price
per share multiplied by the number of shares acquired upon exercise of an
option.
(2) Value of exercisable/unexercisable in-the-money options is equal to the
difference between the fair market value per share of Common Stock of $.50
at December 31, 1995, and the option exercise price per share multiplied by
the number of shares subject to options.
STOCK OPTIONS
The Corporation has in effect an Incentive Stock Option Plan pursuant to
which key employees of the Company and its subsidiaries may be granted options
to purchase shares of the Company's Common Stock. The Board of Directors
administers such plan, selects optionees and grants options, and fixes the terms
of such options subject to the terms of the plan. In general, options under the
Company's Incentive Stock Option Plan are exercisable at a price equal to the
fair market value on the date of grant for a period of
-36-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 10. EXECUTIVE COMPENSATION (CONTINUED)
STOCK OPTIONS (CONTINUED)
five years during the optionee's continued employment with the Company or one of
its subsidiaries and after two years of employment with the Company. As of
December 31, 1995, the Company had outstanding options which were granted in
1992 and in 1994 to certain officers and employees to purchase 74,000 shares of
the Company common stock at $.90 per share.
Subsequent to December 31, 1995, the Board of Directors granted additional
options to certain officers and employees to purchase 80,000 shares of the
Company common stock at $1.00 per share. No option have, as yet, been exercised
pursuant to the plan.
OTHER STOCK OPTIONS
The Company also grants stock options to management and its outside directors 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. As of
December 31, 1995, the Company had outstanding options which were granted in
1991 to outside directors of the Company to purchase 45,000 shares of Company
Common Stock at $.90 per share.
Subsequent to December 31, 1995, the options granted in 1991 to an outside
director of the Company expired. Additionally, the Board of Directors approved
the issuance of stock options to outside directors of the company to purchase up
to 50,000 shares of the Company's common stock at $1.00 per share.
Subsequent to December 31, 1995, the Board of Directors of the Company approved
options, which will be granted monthly for 24 months, to an outside consultant
to purchase up to 60,000 shares of the Company common stock at $1.00 per share.
This option agreement can be canceled by the Company upon a 30 day written
notice.
None of the stock options granted to outside directors have, as yet, been
exercised.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 10. EXECUTIVE COMPENSATION (CONTINUED)
401(k) CASH OR DEFERRED COMPENSATION PLAN
In 1994, the Company established a tax-qualified 401(k) cash or deferred
compensation plan that covers all employees of the Company who have completed
one year of service and attained age 21. Participants are permitted, within the
limitations imposed by the Internal Revenue Code of 1954, as amended, to make
pretax contributions. Participants are always fully vested in their accounts
under the Plan. The Company makes matching contributions equal to 100% of the
first 2% of an employee's salary and 50% of the next 5% of an employee's salary,
which contributions vest in the employee proportionately over a period of six
years. Amounts accrued pursuant to the Plan for the benefit of executive
officers are included in the Summary Compensation Table under the column "All
Other Compensation". Prior to 1994, the Company was part of Barringer
Technologies Inc.'s tax qualified 401(k) plan.
COMPENSATION OF DIRECTORS
The non-employee directors receive $1,500 per quarter and $500 for each meeting
they attend plus expenses.
OTHER
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company during
the year ended December 31, 1995, the Company is unaware of any officer or
director who failed to file reports required by Section 16 of the Securities
Exchange Act of 1934, except that: (1) Robert H. Walker did not timely file a
report on Form 3 necessitated by his election as an officer of the Company on
January 29, 1991; he also did not report timely the May 5, 1992 acquisition of
options to purchase 35,000 shares of Common Stock at $.90 per share, as well as
the acquisition on January 25, 1994 of options to purchase 10,000 shares of
Common Stock at $.90 per share; (2) Randolph Ware did not file a report on Form
3 necessitated by his election as a director on January 29, 1991, and did not
timely report an acquisition of Common Stock on June 28, 1993 of 20,000 shares
at $.50 per shares; (3) Anthony Barringer did
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<PAGE>
ITEM 10. EXECUTIVE COMPENSATION (CONTINUED)
OTHER (CONTINUED)
not timely file a report on Form 3 necessitated by his election as a director on
January 29, 1991, as well as not timely report his acquisition on June 28, 1993
of 20,000 shares of Common Stock at $.50 per shares; (4) Charles Ramsay did not
timely file a report on Form 3 necessitated by his election as an officer on
January 29, 1991, as well as not timely report his acquisition on May 6, 1992 of
options to purchase 8,000 shares of Common Stock at $.90 per share, as well as
not timely report his acquisition on January 25, 1994 of options to purchase
8,000 shares of Common Stock at $.90 per share; (5) Vern Peterson did not timely
file a Form 3 necessitated by his election as an officer on January 29, 1991, as
well as not timely report his acquisition on May 6, 1992 of options to purchase
8,000 shares of Common Stock at $.90 per share, as well as not timely report his
acquisition on January 25, 1994 of options to purchase 8,000 shares of Common
Stock at $.90 per share. Upon discovery in August 1996 of the oversight of
filing of these reports, all of the proper fillings were made promptly.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of March 14, 1996, the number of outstanding
options included with the number of shares of Common Stock owned by each officer
and director of the Company and all directors and 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 March 14, 1996, there were 1,652,016 shares of the
Company's Common Stock issued and outstanding and 289,000 outstanding options to
purchase the Company's Common Stock.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (CONTINUED)
Number of Shares Percent
Name of Beneficial Owner of Common Stock(1) of Class
- ------------------------ ------------------ --------
Robert H. Walker..................... 80,000 4.2
Barringer Laboratories, Inc.
15000 W. Sixth Ave., Suite 300
Golden, Colorado 80401
Vern Peterson........................ 34,000 1.8
Barringer Laboratories, Inc.
5301 Longley Lane
Bldg. E, Suite 178
Reno, Nevada 89511
Charles E. Ramsay.................... 28,000 1.4
Barringer Laboratories, Inc.
15000 W. 6th Ave., Suite 300
Golden, Colorado 80401
Stanley S. Binder.................... 10,000 *
Barringer Technologies Inc.
219 South Street
New Providence, New Jersey 07974
Anthony R. Barringer................. 37,000 1.9
25060 Montane Drive West
Golden, Colorado 80401
John J. Harte........................ 35,000 1.5
Mid-Lakes Distributing, Inc.
1029-37 West Adams Street
Chicago, Illinois 60607
Randolph H. Ware..................... 30,000 1.5
2105 Kohler
Boulder, Colorado 80303
C.F. Wasser, III..................... 136,418 7.0
12290 Chinchilla Ct.
Rosemont, Minnesota 55068
All directors and officers as a group
consisting of eight (8) persons.... 390,418 20.1
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (CONTINUED)
Number of Shares Percent
Name of Beneficial Owner of Common Stock(1) of Class
- ------------------------ ------------------ ---------
Barringer Technologies, Inc.(2)(3)... 432,475 22.2
219 South Street
New Providence, New Jersey 07974
Dino Catelli......................... 183,847 9.5
Via Diversi 23
Lucca, Italy
LAMBDA III L.P. ..................... 193,103 9.9
41 East 57th Street
New York, New York 10022
- ------------------------------
*Less than 1%
(1) Includes 289,000 outstanding stock options granted to the officers,
directors of the Company, and to an outside consultant.
(2) Includes 33,333 shares owned by Barringer Research Ltd., a wholly-owned
subsidiary of BTI.
(3) Does not include 7,500 of the Company's warrants issued to BTI. The
warrants were issued to BTI in connection with the prepayment of a portion
of the note due from BTI to the Company. Each warrant entitles BTI to
purchase one share of the Company's Common Stock upon payment of $1.00.
Each warrant will be exercisable for a period of five (5) years after date
of issue. As of March 14, 1996 no warrants have been issued.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BTI's equity interest in the Company is 26.2% of the outstanding Common Stock.
Effective April 30, 1992 the Company sold all the common stock of its Canadian
subsidiary, Barringer Laboratories, Ltd to Philip Environmental Ltd. The
Company used the net proceeds to repay $1,662,000 of short-term borrowings plus
related interest including the portion of such indebtedness which was due and
owed BTI. Principal and interest under this agreement were originally due on
May 31, 1994. Interest was payable semi-annually at a bank's prime rate plus
2%. In 1994, BTI made a $136,000 principal payment on its' note due to the
Company. Additionally, BTI paid $93,000 to Philip Environmental on the behalf
of the Company. This payment was related to the warranties, representations,
and guarantees made by the Company in the 1992 sale of the Company's Canadian
subsidiary. In connection with a new line of credit in 1994, the Company agreed
to extend BTI's note due date to May 31, 1995 for BTI's guarantee of the line of
credit and increase the interest on the note to a bank's prime rate plus 4%
(12.5% at December 31, 1994) payable monthly from a bank's prime rate plus 2%
payable semi-annually.
Effective March 30, 1995 the Company agreed to an additional extension of BTI's
note due date to December 31, 1995 or the date upon which BTI sells or otherwise
disposes of any or all of its investment in the common stock of the Company
(1,074,000 common shares held as security under this note agreement). In
exchange for the Company's agreement to extend the due date of this note, the
Company will receive warrants to purchase 25,000 shares of common stock of BTI
for a period of two years at an exercise price of $1.00 per share.
In exchange for 1992 prepayments totalling $150,000, BTI is entitled to 7,500
warrants to purchase 7,500 shares of the Company's common stock. Each warrant
will be exercisable for a period of five years after the date of issue and
entitles BTI to purchase one share of common stock at an exercise price of $1.00
per share. As of December 31,1995 the Company has not issued these warrants.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)
Effective December 13, 1995 under an agreement dated December 8, 1995, Barringer
Laboratories, Inc. (the "Company") purchased from Barringer Technologies, Inc.
("BTI") 647,238 shares of the Company's common stock which were owned by BTI for
$809,000, which consisted of a cash payment of $300,000 and cancellation of
intercompany obligations (note and intercompany Account Receivable) in the
amount of $509,000. Additionally, 88,260 shares of the Company's Common Stock
owned by BTI were placed in an escrow account, which will be returned to BTI if
the Company's 1996 earnings are at least 13% higher than 1995 earnings. If
these earnings are not met, then the 88,260 shares would revert back to the
Company. Therefore, the effective purchase price per share would go from $1.25
down to $1.10. BTI has agreed not to transfer its remaining 26% interest in BLI
until January 2, 1997, subject to certain conditions, and has agreed to grant
BLI a right of first refusal with respect to such shares until January 2, 1997,
subject to certain conditions. Intercompany Agreement between the Company and
BTI was terminated on December 13, 1995. BTI agreed to terminate all voting
trusts, proxy arrangements, and all other arrangements and agreements of any
kind or nature to which it is a party under which it is authorized to vote
shares of the Company. BTI further agreed not to enter into any future voting
trusts, proxy agreements, and any other agreements relating to shares of the
Company for the next twenty-four (24) months.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARY
PART III
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None
(b) Reports on Form 8-K.
The following report was filed during the last quarter, 1995.
Date of Report Item
-------------- ----
December 13, 1995 Company purchased from
Barringer Technologies Inc.
("BTI") 647,238 shares of the
Company's common stock.
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BARRINGER LABORATORIES, INC.
Date: September 23, 1996
By: /s/ Robert H. Walker
---------------------------
Robert H. Walker, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature Titles or Capacities Date
- --------- --------------------- ----
/s/ Robert H. Walker Director, President and September 23, 1996
- ------------------------ Chief Executive Officer
Robert H. Walker (Principal Executive
Officer)
/s/ Stanley S. Binder Director September 23, 1996
- ------------------------
Stanley S. Binder
/s/ Charles E. Ramsay Chief Financial Officer, September 23, 1996
- ------------------------ Treasurer and Secretary
Charles E. Ramsay
/s/ Anthony R. Barringer Director September 23, 1996
- ------------------------
Anthony R. Barringer
/s/ John J. Harte Director September 23, 1996
- ------------------------
John J. Harte
/s/ Randolph H. Ware Director September 23, 1996
- ------------------------
Randolph H. Ware
/s/ C.F. Wasser, III Director September 23, 1996
- ------------------------
C.F. Wasser, III
-45-
