<PAGE>
FORM 10-KSB
[X] ANNUAL REPORT Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
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,
1996 were $7,251,000.
Number of shares outstanding as of March 12, 1997, of Common Stock, $.01 par
value - 1,563,756.
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<PAGE>
The aggregate market value of voting stock held by nonaffiliates of the
registrant is $4,886,738 as of March 12, 1997.
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 facility in Hermosillo, Sonora, Mexico.
The Company was organized in December, 1988 by Barringer Technologies Inc.
("BTI"). As of November 18, 1996, BTI had sold all of its remaining
ownership of the Company's Common Stock.
In 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 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.
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ITEM 1. DESCRIPTION OF BUSINESS (CONTINUED)
(a) GENERAL (CONTINUED)
Effective December 13, 1995 the Company purchased 647,238 shares of it Common
Stock from its largest stockholder, BTI.
During 1996, the Company experienced a $493,000 (7.3%) increase in sales from
1995. The Environmental Division 1996 sales decreased $503,000 (11.1%) from
1995 due to the uncertainty surrounding the allocation of funds through the
government budgeting process. Mineral Division 1996 sales increased $996,000
(44.6%) from 1995 due to higher U.S. sales which increased $529,000 (28.7%) from
1995. This increase was a result of the addition of four new major customers
and volume sales increases from one existing customer. Additionally, Mineral
Division Mexico sales in 1996 increased $467,000 (119.6%) from 1995 due to an
existing customer's special project, volume sales increases from another
existing customer, and the addition of new customers. Due to the overall
increase in sales, lower depreciation costs, and the production efficiencies in
the Mineral Division labs, the Company generated 1996 after tax net income of
$710,000.
As of May 17, 1996, the Company entered into an exclusive agreement with The
Nassau Group, Inc. ("Nassau") of Westport, Connecticut, to provide the Company
with financial advisory services and investment banking support over the course
of the next two years. The Nassau Group will provide assistance in terms of
evaluating strategic growth and acquisition opportunities, evaluating financing
alternatives and helping to arrange for the Company's future capital needs.
In the fourth quarter, 1996, the Company closed the mineral preparation facility
in Helena, Montana due to the depressed gold exploration business in Montana.
As of November 22, 1996, the Company formed a subsidiary, Barringer Laboratories
del Peru S.A. ("BLP") located in Lima, Peru. The Company owns 65% of the
outstanding shares of BLP, a Peruvian Company owns 30%, and an individual owns
5%. For the year ended December 31, 1996 BLP had no operations.
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<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS (CONTINUED)
(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.
As of November 22, 1996, the Company and a Peruvian Company formed a subsidiary,
Barringer Laboratories de Peru S.A. ("BLP"). BLP will have a satellite mineral
sample preparation facility in Lima, Peru to support the gold exploration
industry.
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.
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.
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<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS (CONTINUED)
(b) NARRATIVE DESCRIPTION OF THE BUSINESS (CONTINUED)
The types of laboratory testing performed include analysis of samples for such
contaminants 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-contami-nated wastes, a combination of hazardous wastes
contaminated with radioactive materials. During 1996, the Company processed in
its environmental lab in Golden over 27,000 samples for approximately 260
customers.
During 1996, the environmental laboratory in Golden experienced a 11% decrease
in sales from 1995. Approximately 25% of 1996 and 44% of 1995 Environmental
sales were a direct 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 1996, the Company increased its sales and marketing
effort relating to the analytical testing services for the mining industry and
other industries involved in environmental monitoring programs and hazardous
waste management.
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<PAGE>
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 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 270,000 samples were processed in
1996 in Reno's mineral laboratory for approximately 115 customers.
The Company has a satellite sample preparation facility in Hermosillo,
Sonora, Mexico.
As of November 22, 1996, the Company and a Peruvian Company formed a subsidiary,
Barringer Laboratories de Peru S.A. ("BLP") located in Lima, Peru. BLP will
have a satellite mineral sample preparation facility in Lima, Peru to support
the gold exploration industry. For the year ended December 31, 1996 BLP had no
operations. This facility should be operational by May, 1997.
The mineral assay laboratory experienced an increase of approxi-mately 45% in
sales for 1996 as compared to an approximate 18% sales decrease in 1995.
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.
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 Terra-Tech, Inc., LAS, Inc., and Quanterra Corporation.
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BACKLOG. The backlog of orders at December 31, 1996 and 1995 was $820,000 and
$1,123,000. 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 1997. 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. There can be no assurance that
these orders will generate sales.
EMPLOYEES. As of December 31, 1996, the Company had 116 employees, the
majority of whom were professional or technical staff. Of this total, 111
people were employed on a full-time basis and there were 5 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 satis-factory.
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 $194,000 September, 2001 office and analytical
Reno, Nevada services laboratory
5301 Longley Lane, #24 2,420 $ 13,800 February, 1998 storage space
Reno, Nevada
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, 1996.
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<PAGE>
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, 1996, there were approximately 35 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, 1996 and 1995 (which represented quota-tions 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
----- -----
1995 First Quarter $ .50 $ .37
Second Quarter .31 .31
Third Quarter .63 .25
Fourth Quarter .81 .25
1996 First Quarter $1.31 $ .37
Second Quarter 1.19 .84
Third Quarter 1.50 .93
Fourth Quarter 2.19 1.44
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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<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the consolidated
financial statements and related notes included elsewhere herein. The Company's
future operating results may be affected by various trends and factors which are
beyond the Company's control. These include, among other factors, the
competitive environment in which the Company operates, future capital needs,
uncertainty of government contracts, uncertainties in revenue due to
fluctuations in weather, and other uncertain business conditions that affect the
Company's businesses.
With the exception of historical information, the matters discussed below under
the headings "Results of Operations" and "Capital Resources and Liquidity" may
include forward-looking statements that involve risks and uncertainties. The
Company wishes to caution readers that a number of important factors discussed
herein, and in other reports filed with the Securities and Exchange Commission,
could affect the Company's actual results and cause actual results to differ
materially from those in the forward-looking statements.
RESULTS OF OPERATIONS
The following is a breakdown of consolidated operating results for the years
ended December 31, 1996 and 1995.
BARRINGER LABORATORIES, INC.
1996 Operating Results Compared to 1995 Operating Results
CONSOLIDATED
--------------------------
Years Ended 12/31
1996 1995
---------- ----------
Sales of Services $7,251,000 $6,758,000
Cost of Services Sold 4,828,000 4,666,000
---------- ----------
Gross Profit 2,423,000 2,092,000
Selling, General and
Administrative Expenses 1,661,000 1,425,000
---------- ----------
Operating Profit 762,000 667,000
Other Income (Expense) (26,000) (102,000)
---------- ----------
Income before Income Taxes $ 736,000 $ 565,000
---------- ----------
---------- ----------
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<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
1996 COMPARED TO 1995
Sales of services of $7,251,000 reflect a $493,000 (7.3%) increase in sales
compared to 1995 sales of $6,758,000. The Environmental Division experienced an
decrease in sales of $503,000 (11.1%) due to sales volume decreases in all three
labs. This sales volume decrease is due to one customer's large one-time 1995
project which generated sales of $254,000 for 1995, and volume decreases of
$249,000 from existing customers. This volume decrease was due to the
uncertainty surrounding the allocation of funds through the government budgeting
process. Approximately 25% 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 experienced a sales increase of $996,000 (44.6%) from 1995 due
to higher U.S. sales, which increased $529,000 (28.7%) from 1995, due to volume
sales increase of $296,000 from one existing customer and the addition of four
new customers. Mineral Mexico sales increased $467,000 (119.6%) from 1995 due
to an existing customer's special project, which generated $92,000 in sales in
1996, volume sales increases of $295,000 from another existing customer, and the
addition of new customers.
Gross profit as a percentage of sales was 33.4% for 1996 compared to 31.0% for
1995. This increase in gross profit was primarily due to the increase in
Mineral Division sales volume, production efficiencies in the Mineral Division,
lower depreciation costs, and fixed costs allocated over a larger sales base.
Selling, general, and administrative expenses of $1,661,000 increased $236,000
(16.6%) from 1995 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 expense totaled $26,000 in 1996 which decreased $76,000 (74.5%) from
other expense of $102,000 in 1995. This decrease was due to lower interest
expenses, lower translation losses, and other income of $6,000. These decreases
were offset by lower interest income in 1996, which decreased $32,000 (40.0%)
from 1995.
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RESULTS OF OPERATIONS (CONTINUED)
1996 COMPARED TO 1995 (CONTINUED)
Income before income taxes was $736,000 in 1996; an increase of $171,000
from 1995 income of $565,000. This increase was primarily due to higher
sales, production efficiencies, lower depreciation costs, fixed costs allocated
over a larger sales base, lower interest expenses, lower translation loss, and
other income. These increases were offset by higher selling, general, and
administrative expenses and lower interest income.
CAPITAL RESOURCES AND LIQUIDITY
Cash and cash equivalents totaled $803,000 at December 31, 1996 compared with
$170,000 at December 31, 1995. The $633,000 increase in cash and cash
equivalents resulted from cash provided by operating activities of $1,039,000,
offset by cash used in investing activities of $248,000 and by cash used in
financing activities of $158,000.
Cash provided by operating activities resulted from net income of $710,000 for
the year and the effect of certain items not affecting cash of $409,000
(primarily depreciation and amortization) offset by an increase in operating
assets net of operating liabilities of $50,000.
Cash used for investing activities of $248,000 was for the purchase of property
and equipment consisting of $102,000 of lab equipment, $46,000 in leasehold
improvements, and $100,000 of computer hardware and software to upgrade the
Laboratory Information Management System (LIMS).
Cash used in financing activities of $158,000 was used to reduce long term debt
in 1996 of $222,000 and used to decrease short term borrowings in 1996 of
$84,000, offset by an increase in long term debt of $148,000.
On September 30, 1996, the Company signed a working line of credit with a bank.
This line of credit bears interest, payable monthly, at a floating rate of prime
plus 1% (9.5% at December 31, 1996) with a minimum yearly charge of $2,500.
This line of credit replaced a previous working line of credit with a lending
institution. This previous line of credit had a floating interest
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RESULTS OF OPERATIONS (CONTINUED)
CAPITAL RESOURCES AND LIQUIDITY (CONTINUED)
rate of prime plus 10% with a minimum monthly charge of $2,500. This new line
of credit availability is equal to 80% of the Company's eligible accounts
receivable. 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 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.
Management of the Company believes that additional capital is required to fund
the short-term and long-term expansion of its environmental and mineral services
business and to continue 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.
At December 31, 1996, the Company has alternative minimum tax credits of
approximately $33,000 available to offset future federal income taxes on an
indefinite carryforward basis and unused net operating loss carryforwards of
approximately $3,464,000. Such net operating loss carryforwards expire in
varying amounts from 1997 to 2006 and are subject to certain limitations under
the Internal Revenue Code ("IRC") of 1986, as amended.
At December 31, 1996 a net deferred tax asset totaling $30,000 was recorded,
relating primarily to available alternative minimum tax credits.
As of December 31, 1996 a valuation allowance of $1,479,000 has been recorded,
as Management of the Company is not able to determine that it is more likely
than not that the remaining deferred tax asset will be realized. The Company
has recorded a valuation allowance primarily related to the uncertainty of
realizing operating loss carryforwards subject to limitations under the IRC of
1986.
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1996 COMPARED TO 1995 (CONTINUED)
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, 1996.
NEW ACCOUNTING PRONOUNCEMENTS
None.
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ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Barringer Laboratories, Inc.
Golden, Colorado
We have audited the accompanying consolidated balance sheets of Barringer
Laboratories, Inc. and subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, share-holders' 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 subsidiaries at December 31, 1996 and 1995, 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
February 13, 1997
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BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
---------- ----------
Sales of Services (Note 8)
United States $6,337,000 $6,368,000
Mexico 914,000 390,000
---------- ----------
Total Sales of Services 7,251,000 6,758,000
Cost of Services Sold 4,828,000 4,666,000
---------- ----------
Gross Profit 2,423,000 2,092,000
Selling, General and
Administrative Expenses 1,661,000 1,425,000
---------- ----------
Operating Profit 762,000 667,000
---------- ----------
Other Income (Expense):
Interest income 25,000 69,000
Interest expense (48,000) (80,000)
Translation loss (9,000) (28,000)
Other 6,000 (63,000)
---------- ----------
Total Other Income (Expense) (26,000) (102,000)
---------- ----------
Income before Income Taxes 736,000 565,000
Provision for Income Taxes
(Note 5) 26,000 8,000
---------- ----------
Net Income $ 710,000 $ 557,000
---------- ----------
---------- ----------
Per Share Data:
Net Income per share $ .43 $ .25
---------- ----------
---------- ----------
Weighted average common
shares outstanding 1,634,653 2,267,335
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
---------------------------
1996 1995
---------- ----------
Assets (Note 3)
Current Assets:
Cash and cash equivalents $ 803,000 $ 170,000
Trade receivables, less
allowance of $15,000 and
$21,000 for doubtful accounts 1,087,000 1,078,000
Due from affiliate - 1,000
Prepaid expenses and other 99,000 113,000
---------- ----------
Total Current Assets 1,989,000 1,362,000
---------- ----------
Property, Plant and Equipment:
Machinery and equipment 2,000,000 1,677,000
Machinery and equipment under
capital lease obligations 191,000 472,000
Leasehold improvements 647,000 639,000
Office furniture and equipment 79,000 62,000
---------- ----------
2,917,000 2,850,000
Less accumulated depreciation and
amortization 2,487,000 2,309,000
---------- ----------
Net Property, Plant and Equipment 430,000 541,000
Other Assets 75,000 47,000
---------- ----------
Total Assets $2,494,000 $1,950,000
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
DECEMBER 31,
-------------------------
1996 1995
---------- ----------
Liabilities and Shareholders' Equity
Current Liabilities:
Line of credit (Note 3) $ - $ 84,000
Trade accounts payable 213,000 235,000
Accrued liabilities:
Payroll, compensation and
related expenses 256,000 239,000
Other 121,000 203,000
Income tax payable 49,000 -
Current maturities of long-term debt
(Note 4) 58,000 150,000
---------- ----------
Total Current Liabilities 697,000 911,000
Long-Term Debt, less current maturities
(Note 4) 89,000 33,000
---------- ----------
Total Liabilities 786,000 944,000
---------- ----------
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 1,652,016 and 2,299,254;
outstanding 1,563,756 and
1,652,016 17,000 23,000
Additional paid-in capital 2,532,000 3,278,000
Accumulated deficit (715,000) (1,425,000)
Translation adjustment (23,000) (15,000)
---------- ----------
1,811,000 1,861,000
Less common stock in treasury,
at cost, 88,260 and 647,238
shares (Note 2) (103,000) (855,000)
---------- ----------
Total Shareholders' Equity 1,708,000 1,006,000
---------- ----------
Total Liabilities and
Shareholders' Equity $2,494,000 $1,950,000
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN 000'S EXCEPT SHARE DATA)
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
COMMON STOCK TREASURY STOCK ADDITIONAL
------------------ ---------------- PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT TOTAL
--------- ------ ------- ------ ---------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 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, December 31, 1995 2,299,254 23 647,238 (855) 3,278 (1,425) (15) 1,006
Acquisition and Retirement
of Treasury Stock (Note 2) (647,238) (6) (558,978) 752 (746) - - -
Translation Adjustment - - - - - - (8) (8)
Net Income for Year - - - - - 710 - 710
--------- --- ------- ----- ------ ------- ----- ------
Balance, December 31, 1996 1,652,016 $ 17 88,260 $(103) $2,532 $ (715) $ (23) $1,708
--------- --- ------- ----- ------ ------- ----- ------
--------- --- ------- ----- ------ ------- ----- ------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-18-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the year $ 710,000 $ 557,000
Items not affecting cash
Depreciation and amortization 397,000 565,000
Deferred income taxes (30,000) -
Bad debt expense 20,000 13,000
Other (8,000) 13,000
Increase in operating assets net
of operating liabilities (50,000) (243,000)
---------- ---------
Cash Provided by Operating
Activities 1,039,000 905,000
---------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (248,000) (200,000)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of Treasury Stock - (346,000)
Increase in long-term debt 148,000 -
Reduction in long-term debt (222,000) (308,000)
Increase (decrease) in short-term
borrowings (84,000) 80,000
---------- ---------
Cash Used in Financing Activities (158,000) (574,000)
---------- ---------
Increase in cash and cash equivalents 633,000 131,000
Cash and cash equivalents, beginning
of year 170,000 39,000
---------- ---------
Cash and cash equivalents, end of year $ 803,000 $ 170,000
---------- ---------
---------- ---------
See accompanying notes to consolidated financial statements.
-19-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
---------- ---------
Decrease (increase) in operating
assets net of operating liabilities
Trade receivables $( 29,000) $(314,000)
Due from affiliate 1,000 (42,000)
Other current assets 44,000 (44,000)
Other assets (28,000) 27,000
Income tax payable 49,000 -
Accounts payable and accrued
liabilities (87,000) 130,000
---------- ---------
Total - net $ (50,000) $(243,000)
---------- ---------
---------- ---------
See accompanying notes to consolidated financial statements.
-20-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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, its wholly owned Mexican subsidiary, and its majority owned Peruvian
subsidiary. All intercompany balances and transactions have been eliminated.
For the year ended December 31, 1996, the Company's Peruvian subsidiary had no
operations.
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,
1996 based upon total sales, 25% of the Company's Environmental Division
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 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 shareholders' equity until a foreign business is sold or
substantially liquidated.
FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION
Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of cash equivalents and trade accounts receivable.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers, generally short payment terms, and their
dispersion across geographic areas.
-21-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company invests temporary cash in demand deposits and money market accounts
with quality financial institutions. Such deposit accounts at times may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.
The carrying amounts of financial instruments including cash equivalents, trade
accounts receivable, trade accounts payable and accrued liabilities approximated
fair value because of the immediate or short-term maturity of these instruments.
The difference between the carrying amount and fair value of the Company's
long-term debt is not significant.
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 ("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.
-22-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STATEMENT OF CASH FLOWS
The Company invests temporary cash in demand deposits and 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 included in the
calculation of income per share when dilutive. For purposes of income per
share, fully diluted income per share is the same as primary income per share.
STOCK OPTION PLANS
The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees",
and related Interpretations in accounting for all stock option plans. Under APB
Opinion 25, no compensation cost has been recognized for stock options issued to
employees as the exercise price of the Company's stock options granted equals or
exceeds the market price of the underlying common stock on the date of grant.
SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Company to
provide pro forma information regarding net income as if compensation cost for
the Company's stock option plans had been determined in accordance with the fair
value based method prescribed in SFAS No. 123.
-23-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. ACQUISITION AND RETIREMENT OF TREASURY STOCK
Effective October 26, 1996 under an agreement dated October 7, 1996,
Barringer Technologies, Inc. ("BTI") transferred 88,260 shares of the Company's
Common Stock to the Company. The Company released restrictions allowing BTI to
sell its remaining ownership of the Company's Common Stock.
Effective December 11, 1996, the Company retired 647,238 shares of its Common
Stock valued at $752,000. These shares were purchased from BTI under an
agreement dated December 8, 1995.
3. LINE OF CREDIT
The Company has a working line of credit from a bank. This line of credit is
equal to 80% of the Company's eligible accounts receivable. This line of credit
bears interest, payable monthly, at a floating rate of prime plus 1% (9.5% at
December 31, 1996) with a minimum yearly 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, 1996 there was no outstanding amount under this line of
credit agreement. During the year ended December 31, 1996, the average amount
outstanding under this line of credit agreement was $25,000, and the weighted
average interest rate was 9.5%. The interest rate was calculated by dividing
the applicable interest expense by the average outstanding balance. The maximum
amount borrowed under this agreement during the year ended December 31, 1996 was
$25,000.
-24-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. LONG-TERM DEBT
Long-term debt consists of the following:
DECEMBER 31,
------------------------
1996 1995
-------- --------
Obligations under capital leases (a) $147,000 $167,000
Other installment obligations - 16,000
-------- --------
147,000 183,000
Less current maturities 58,000 150,000
-------- --------
$ 89,000 $ 33,000
-------- --------
-------- --------
(a) CAPITAL LEASES
As of December 31, 1996 future net minimum lease payments under capital lease
obligations are as follows:
1997 $ 73,000
1998 47,000
1999 47,000
2000 8,000
--------
Total minimum lease payments 175,000
Less amounts representing interest 27,000
Less amounts representing executory costs 1,000
--------
Present value of net minimum lease payments $147,000
--------
--------
At December 31, 1996 and 1995 the net book value of equipment under capital
lease obligations was $140,000 and $174,000.
-25-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. INCOME TAXES
Sources of income (loss) before income taxes include:
1996 1995
----------- -----------
United States operations $ 759,000 $ 593,000
Mexico operations (23,000) (28,000)
----------- -----------
$ 736,000 $ 565,000
----------- -----------
----------- -----------
The provision for income taxes for the years ended December 31, consisted of
the following:
1996 1995
-------- ---------
Current:
Federal $ 26,000 $ 8,000
State 30,000 -
Deferred:
Federal 246,000 179,000
State 22,000 16,000
-------- ---------
324,000 203,000
Decrease in valuation allowance (298,000) (195,000)
-------- ---------
$ 26,000 $ 8,000
-------- ---------
-------- ---------
The significant components of deferred income tax expense consisted of the
following:
1996 1995
--------- ---------
Utilization of net operating
loss carryforward $ 283,000 $ 263,000
Expense accruals 2,000 21,000
Depreciation and amortization (31,000) (47,000)
Other 14,000 (42,000)
--------- ---------
Deferred income tax expense $ 268,000 $ 195,000
--------- ---------
--------- ---------
-26-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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 1996 and 1995 with the actual taxes:
1996 1995
--------- ---------
Expense computed
at the statutory rate $ 250,000 $ 192,000
Losses for which no tax
benefit has been recognized 8,000 10,000
Valuation allowance (298,000) (195,000)
Other 66,000 1,000
--------- ---------
Provision for income taxes $ 26,000 $ 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:
1996 1995
----------- -----------
Tax operating loss carryforwards $ 1,282,000 $ 1,565,000
Property and equipment, principally
due to differences in depreciation 160,000 129,000
Expense accruals 26,000 31,000
Other 41,000 52,000
----------- -----------
1,509,000 1,777,000
Valuation allowance (1,479,000) (1,777,000)
----------- -----------
Net deferred tax asset $ 30,000 $ -
----------- -----------
----------- -----------
At December 31, 1996, the net deferred tax asset recorded is included in prepaid
expenses and other in the accompanying consolidated balance sheet.
At December 31, 1996, the Company has alternative minimum tax credits of
approximately $33,000 available to offset future federal income taxes on an
indefinite carryforward basis and unused net operating loss carryforwards of
approximately $3,464,000. Such net operating loss carryforwards expire in
varying amounts from 1997 to 2006 and are subject to certain limitations under
the Internal Revenue Code ("IRC") of 1986, as amended.
-27-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
RECONCILIATION OF INCOME TAXES (CONTINUED)
As of December 31, 1996 a valuation allowance 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. The Company has recorded a valuation
allowance primarily related to the uncertainty of realizing operating loss
carryforwards subject to limitations under the IRC of 1986.
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, 1996, 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 1,563,756
Stock Options (a)
$ .90 99,000
$1.00 190,000
$1.06 24,000
$1.63 25,000
Warrants (b)
Nassau Group Warrants
expiring five years $1.06 80,000
after issuance $1.25 25,000
---------
2,006,756
---------
---------
(a) STOCK OPTIONS
At December 31, 1996, the Company has two stock option plans, which are
described below. The Company applies APB Opinion 25, "Accounting for Stock
Issued to Employees", and related Interpretations in accounting for all plans.
Under APB Opinion 25, no compensation cost has been recognized for stock options
issued to employees as the exercise price of the Company's stock options granted
equals or exceeds the market price of the underlying common stock on the date of
grant.
-28-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. SHAREHOLDERS' EQUITY (CONTINUED)
(a) STOCK OPTIONS (CONTINUED)
1989 INCENTIVE STOCK OPTION PLAN
The 1989 Incentive 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.
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 subject to each grant, the applicable restriction period, the purchase
price for the shares subject to the option, and to 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, options granted under the Plan typically
vest 60% after two years of continuous employment of the optionee after the date
of grant and 20% each year of continuous employment thereafter.
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 non-qualified stock options to management, outside
directors, and 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. As of December 31, 1996 all non-qualified stock
options have been granted at an exercise price in excess of the current market
value at the time of grant.
-29-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
OTHER STOCK OPTIONS (CONTINUED)
In 1996 the Company granted to certain consultants non-qualified options to
purchase 84,000 shares of common stock at $1.00 and $1.06 per share in
connection with agreements to provide services to the Company. Such options are
exercisable for a period of five years from the date of grant and vest on a
monthly basis over a two year period. At December 31, 1996 options to purchase
34,540 shares of common stock are exercisable under the agreements.
(b) WARRANTS
In May 1996 the Company granted to certain individuals associated with The
Nassau Group, Inc. warrants to purchase 80,000 shares and 25,000 shares of
common stock at $1.06 and $1.25 per share as an inducement to such individuals
to become involved in the Company and also an inducement to purchase 10% of the
outstanding shares of the Company's Common Stock. Such warrant are exercisable
for a period of five years from the date of grant. Of the total warrants
granted, warrants to purchase 50,000 shares of common stock vested when granted
and the remaining warrants vest on a monthly basis over a one year period. At
December 31, 1996 warrants to purchase 84,167 shares of common stock were issued
and exercisable under the agreement.
SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Company to
provide pro forma information regarding net income as if compensation cost for
the Company's stock option plans had been determined in accordance with the fair
value based method prescribed in SFAS No. 123. The Company estimated the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
1996 grants: dividend yield of 0%; expected volatility of 30% to 34%; risk free
interest rates of 5.25% to 6.27%; and expected lives of five years.
Under the accounting provisions of SFAS No. 123, the Company's net income and
net income per share would have been adjusted to the following pro forma
amounts:
-30-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
((CONTINUED))
1996 1995
--------- ---------
NET INCOME:
As reported $ 710,000 $ 557,000
Pro forma 686,000 557,000
NET INCOME PER SHARE:
As reported $ .43 $ .25
Pro forma $ .42 $ .25
(1) No proforma adjustment is recorded as no options or warrants were granted
during fiscal 1995.
During the initial phase-in period of SFAS 123, the effects on pro forma results
are not likely to be representative of the effects on pro forma results in
future years since options vest over several years and additional awards could
be made each year.
A summary of the status of the Company's stock option plans and outstanding
warrants as of December 31, 1996 and 1995 and changes during the years ended on
those dates is presented below:
1996 1995
------------------ ----------------------
Weighted
Average
Range of Exercise Range of Exercise
Shares Prices Shares Price
-------- -------- -------- ----------
Outstanding,
beginning of year 151,500 $ .90 203,500 $.90-$1.00
Granted 344,000 1.08 - -
Cancelled (7,500) 1.00 - -
Expired (45,000) .90 (52,000) .90
------- ----- ------- ----------
Outstanding,
end of year 443,000 $1.04 151,500 $.90-$1.00
------- ----- ------- ----------
------- ----- ------- ----------
Options and warrants
exercisable, end
of year 276,976 $1.05 101,300 $.90-$1.00
------- ----- ------- ----------
------- ----- ------- ----------
Weighted average fair
value of options
and warrants granted
during the year $.22 $ -
------- -------
------- -------
-31-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
((CONTINUED))
The following table summarizes information about stock options and warrants
outstanding at December 31, 1996:
Options Outstanding Options Exercisable
------------------------------------ ----------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 12/31/96 Life Price at 12/31/96 Price
- ----------- ----------- ----------- -------- ----------- ---------
$ .90-$1.06 393,000 2.8 years $1.00 247,800 $ .99
$1.25-$1.63 50,000 4.6 years 1.44 29,167 1.57
------- -------
$ .90-$1.63 443,000 2.9 years 1.04 276,967 1.05
------- -------
------- -------
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, 1996.
7. COMMITMENTS
The Company rents office and laboratory facilities, and equipment under various
operating leases. Total rental expenses under such leases amounted to $558,000
and $486,000 for each of the two years ended December 31, 1996 and 1995. At
December 31, 1996 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, 1997 $ 534,000
1998 483,000
1999 447,000
2000 269,000
2001 157,000
----------
$1,890,000
----------
----------
-32-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
((CONTINUED))
8. MAJOR CUSTOMER
In 1995 sales to one customer totaled approximately $825,000 accounting for 12%
of total sales. No single customer accounted for more than 10% of sales in
1996.
9. INFORMATION CONCERNING THE COMPANY'S PRINCIPAL ACTIVITIES
A summary of the Company's operations by geographic area for the year ended
December 31, 1996, is as follows:
1996
----------
Total sales of services
United States $6,337,000
Mexico 914,000
----------
Total $7,251,000
----------
----------
Earnings (loss) from operations
before income taxes
United States $ 759,000
Mexico (23,000)
----------
Total $ 736,000
----------
----------
Identifiable Assets
United States $2,612,000
Mexico 156,000
Eliminations (304,000)
----------
Totals $2,464,000
----------
----------
For the year ended December 31, 1995 the Company's foreign operations were not
significant.
10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The Company made cash payments for interest of $48,000 and $80,000 in 1996 and
1995.
The Company made cash payments of $10,000 and $5,000 for income taxes in 1996
and 1995.
The Company acquired $148,000 and $110,000 of equipment under capital lease
obligations in 1996 and 1995.
-33-
<PAGE>
PART II
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND CONSOLIDATED FINANCIAL DISCLOSURE
Not applicable.
-34-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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
R. Scott Asen...........Director of the Company 1996
Anthony R. Barringer....Director of the Company 1991
John P. Holmes..........Director of the Company 1996
J. Francis Lavelle......Director of the Company 1996
Randolph H. Ware........Director of the Company 1991
C.F. Wasser, III........Director of the Company 1991
Vern K. Peterson........Vice President --
Charles E. Ramsay.......Secretary, Treasurer, and --
Chief Financial Officer of
the Company
Robert H. Walker, 49, 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.
-35-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT.)
R. Scott Asen, 52, is a Director of the Company. Mr. Asen has been general
partner of Pioneer Associates, Pioneer III-A, Pioneer III-B and Pioneer IV,
venture capital investment funds, since 1981, 1983, and 1984, respectively.
Since 1983, Mr. Asen has been President of Asen and Co., Inc., an investment
management firm. Presently, Mr. Asen is also a director of Biomagnetic
Technologies, Inc., Davox Corporation, SeaMed Corporation and a number of
privately held companies.
Dr. Anthony R. Barringer, 72, 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 and Chief
Executive Officer 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 P. Holmes, III, 35, is a Director of the Company. Mr. Holmes is the
founder and a Managing Director of Ahern Partners, Inc., the general partner of
a private investment fund, and managing director of The Nassau Group. Prior to
founding Ahern in 1989, Mr. Holmes was a Vice President at First New York
Securities. Mr. Holmes joined First New York Securities from Oppenheimer & Co.,
where he served as a Vice President. Mr. Holmes received his BA in Political
Science from Trinity College in 1983.
J. Francis Lavelle, 33, is a Director of the Company. Mr. Lavelle is the
founder and a Managing Director of the Nassau Group, Inc. a boutique investment
banking and strategic consulting firm which focuses on the environmental
industry. Prior to establishing The Nassau Group, Mr. Lavelle was recruited by
Baring Brothers & Co., Inc., a UK based firm, to assist in the development of a
full-scale investment banking presence in the United States. He was an
executive with Baring for five years, his last position being Vice President
responsible for international and domestic mergers and acquisitions. Mr.
Lavelle joined Baring Brothers from Booz, Allen & Hamilton where his fields of
expertise were international merger and acquisition advice as well as business
strategy development. He graduated CUM LAUDE from Princeton University after
completing an A.B. degree at the Woodrow Wilson School of Public and
International Affairs.
-36-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT.)
Dr. Randolph H. Ware, 52, 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
research group funded by the National Science Foundation and NASA to make
scientific use of the Global Positioning System (GPS) satellites. He now serves
as Director of UNAVCO, and as Chairman of Radiometrics Inc.
C.F. Wasser, III, 45, 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, 44, 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, 51, 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 SEVEN (7) 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.
-37-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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, 1996 for the executive
officers whose total cash and non-cash compensation exceeded $100,000 and for
his prior two years renumeration.
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ------------------------- -------
Other
Annual Restricted All Other
Name and Compen- Stock LTIP Compen-
Principal sation Award(s) Option/ Payouts sation
Position Year(1) Salary($) Bonus($) ($) ($) SARs(#)(2) ($) ($)(3)
- -------- ------- --------- -------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert H. Walker 1996 111,800 44,364 N/A N/A 60,000 N/A 13,733
President and 1995 108,212 31,312 N/A N/A - N/A 13,596
CEO 1994 104,500 16,000 N/A N/A 10,000 N/A 13,644
Vern Peterson 1996 82,597 23,662 N/A N/A 18,000 N/A 7,468
Vice President 1995 68,250 7,320 N/A N/A - N/A 7,334
1994 68,250 23,908 N/A N/A 8,000 N/A 6,068
</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 1997 is $111,800. Bonuses for Mr. Walker
and other individuals are determined by the Compensation Committee of the Board
of Directors based on overall Company performance.
-38-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 10. EXECUTIVE COMPENSATION (CONTINUED)
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
---------------------------------------------------------------------------------
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE($/SH) DATE
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert H. Walker 35,000 33% $1.00/Share 01-25-2001
25,000 31% $1.63/Share 10-31-2001
Vern K. Peterson 18,000 17% $1.00/Share 01-25-2001
</TABLE>
AGGREGATE OPTIONS EXERCISED IN 1996 AND OPTION VALUES AT DECEMBER 31, 1996.
The following table sets forth certain information regarding options to
purchase shares of Common Stock exercised during the Company's 1996 fiscal
year and the number and value of exercisable and unexercisable options to
purchase shares of Common Stock held as of the end of the Company's 1996
fiscal year by the executive officer of the Company named in the Summary
Compensation Table:
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
--------------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)
------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- --------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Robert H. Walker 0 0 0/105,000 $0/$100,175
Vern K. Peterson 0 0 0/ 34,000 $0/$ 37,640
</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
$2.06 at December 31, 1996, and the option exercise price per share
multiplied by the number of shares subject to options.
-39-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 10. EXECUTIVE COMPENSATION (CONTINUED)
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 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, 1996, 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. In 1996, 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 options 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.
In 1996, the options granted in 1991 to outside directors 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. In 1996, 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.
In 1996, the Board of Directors of the Company approved options, which will
be granted monthly for 24 months, to the Company's legal counsel to purchase
up to 24,000 shares of the Company common stock at $1.06 per share. In 1996,
the Board of Directors of the Company approved options to an officer of the
Company to purchase up to 25,000 shares of the Company's common stock at
$1.63 per share.
-40-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
OTHER STOCK OPTIONS (CONTINUED)
None of the stock options granted to the outside directors or to the officer
have, as yet, been exercised.
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.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 12, 1997, 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 12, 1997, there were 1,563,756
shares of the Company's Common Stock issued and outstanding, 338,000
outstanding options to purchase the Company's Common Stock, and 105,000
outstanding warrants to purchase the Company's Common stock.
-41-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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..................... 76,507 4.0
Barringer Laboratories, Inc.
15000 W. Sixth Ave., Suite 300
Golden, Colorado 80401
Vern Peterson........................ 14,400 *
Barringer Laboratories, Inc.
5301 Longley Lane
Bldg. E, Suite 178
Reno, Nevada 89511
Charles E. Ramsay.................... 14,400 *
Barringer Laboratories, Inc.
15000 W. 6th Ave., Suite 300
Golden, Colorado 80401
R. Scott Asen(2)(3)(4)............... 149,900 8.3
Asen and Co., Inc.
224 East 49th St.
New York, NY 10017
Anthony R. Barringer................. 37,000 1.9
25060 Montane Drive West
Golden, Colorado 80401
John P. Holmes, III(5)............... 240,649 12.6
The Nassau Group, Inc.
18 Kings Hwy. North
Westport, CT 06880
J. Francis Lavelle(6)................ 240,469 12.6
The Nassau Group, Inc.
18 Kings Hwy. North
Westport, CT 06880
-42-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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
- ------------------------ ------------------ --------
Randolph H. Ware..................... 30,000 1.6
2105 Kohler
Boulder, Colorado 80303
C.F. Wasser, III..................... 141,438 7.4
12290 Chinchilla Ct.
Rosemont, Minnesota 55068
All directors and officers as a group
consisting of nine (9) persons..... 944,583 52.6
- ----------------
*Less than 1%
(1) Includes 233,100 outstanding stock options granted to the officers,
directors of the Company, outside consultant, and outside legal counsel.
(2) Includes 5,814 shares of the Company's Common Stock held by an account
titled, "Dean Witter Reynolds C/F David V. Foster IRA Rollover dated
2/17/95". Mr. Asen manages this account and disclaims beneficial
ownership of all shares owned by this account.
(3) Includes 8,721 shares of the Company's Common Stock held by an account
titled, "Asen and Co., Inc. FBO SDFJ, Inc.". Mr. Asen manages this
account and disclaims beneficial ownership of all shares owned by this
account.
(4) Includes 5,814 shares of the Company's Common Stock held by an account
titled, "Victoria Street". Mr. Asen manages this account and disclaims
beneficial ownership of all shares owned by this account.
-43-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (CONTINUED)
(5) Includes 50,469 of the Company's warrants. The warrants were issued to
Mr. Holmes as an inducement to Mr. Holmes to become involved in the
Company and also an inducement to purchase 10% of the outstanding shares
of the Company's Common Stock. Each warrant entitles Mr. Holmes to
purchase one share of the Company's Common Stock upon an average payment
of $1.11. Each warrant is exercisable for a period of five (5) years
after date of issue. As of March 14, 1997, 46,464 warrants have been
issued.
(6) Includes 50,469 of the Company's warrants. The warrants were issued to
Mr. Lavelle as an inducement to Mr. Lavelle to become involved in the
Company and also an inducement to purchase 10% of the outstanding shares
of the Company's Common Stock. Each warrant entitles Mr. Lavelle to
purchase one share of the Company's Common Stock upon an average payment
of $1.11. Each warrant is exercisable for a period of five (5) years
after date of issue. As of March 14, 1997, 46,464 warrants have been
issued.
-44-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of November 18, 1996 BTI sold all of its remaining ownership of the Company's
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, 1996, the Company paid BTI $4,931 for the
cancellation of these warrants.
-45-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
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. The 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.
Effective October 28, 1996 under an Agreement dated October 7, 1996, Barringer
Technologies, Inc. ("BTI") sold all of its remaining ownership of the Company's
Common Stock, net of the 88,260 escrowed shares of the Company's Common Stock
which were returned to the Company.
-46-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)
Effective May 17, 1996, the Company entered into an exclusive agreement with The
Nassau Group, Inc. ("Nassau") of Westport, Connecticut, to provide the Company
with financial advisory services and investment banking support over the course
of the next two years. Nassau will provide assistance in terms of evaluating
strategic growth and acquisition opportunities, evaluating financing
alternatives and helping to arrange for the Company's future capital needs. The
Company granted warrants to individuals associated with Nassau as an inducement
to such individuals to become involved in the Company and also an inducement to
purchase 10% of the outstanding shares of the Company's Common Stock. Such
warrants will be exercisable for a period of five years after date of issue and
entitle these individuals to purchase 80,000 shares and 25,000 shares of Common
Stock at $1.00 per share and $1.25 per share, respectively.
-47-
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART III
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
---------
10.27 Barringer Technologies, Inc.'s sale of Barringer
Laboratories, Inc.'s Common Stock Agreement dated October 7,
1996
23.1 Consent of BDO Seidman, LLP.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
The following report was filed during the last quarter, 1996.
DATE OF REPORT ITEM
-------------- ----
November 13, 1996 Resignation of Stanley S. Binder and
John J. Harte from the Company's Board
of Directors.
-48-
<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: March 24, 1997
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 March 24, 1997
- ----------------------- Chief Executive Officer
Robert H. Walker (Principal Executive
Officer)
/s/R. SCOTT ASEN Director March 24, 1997
- -----------------------
R. Scott Asen
/s/CHARLES E. RAMSAY Chief Financial Officer, March 24, 1997
- ----------------------- Treasurer and Secretary
Charles E. Ramsay
/s/ANTHONY R. BARRINGER Director March 24, 1997
- -----------------------
Anthony R. Barringer
/s/JOHN P. HOLMES Director March 24, 1997
- -----------------------
John P. Holmes
/s/RANDOLPH H. WARE Director March 24, 1997
- -----------------------
Randolph H. Ware
/s/C.F. WASSER, III Director March 24, 1997
- -----------------------
C.F. Wasser, III
/s/J. FRANCIS LAVELLE Director March 24, 1997
- -----------------------
J. Francis Lavelle
-49-
<PAGE>
INDEX TO EXHIBITS
PAGE
----
Exhibit 10.27 Barringer Technologies, Inc.'s 51
sale of Barringer Laboratories,
Inc.'s Common Stock Agreement
dated October 7, 1996.
Exhibit 23.1 Consent of BDO Seidman, LLP. 52
Exhibit 27.1 Financial Data Schedule. 53
-50-
<PAGE>
EXHIBIT 10.27
Barringer Technologies, Inc.'s
Sale Of
Barringer Laboratories, Inc.'s
Common Stock Agreement
Dated
October 7, 1996
-51-
<PAGE>
TERMINATION AGREEMENT
THIS AGREEMENT is made and entered into this 7th day of October, 1996, by
and among BARRINGER LABORATORIES, INC., a Delaware corporation ("Barringer"),
and BARRINGER TECHNOLOGIES, INC., a Delaware corporation, ("BTI"). Barringer
and BTI may be referred to herein collectively as "Parties."
WHEREAS, pursuant to the Stock Purchase Agreement dated December 8, 1995
(the "1995 Agreement"). BTI sold, and Barringer purchased, 647,238 shares of
Barringer Laboratories, Inc. common stock; and
WHEREAS, under the terms of the 1995 Agreement, BTI granted Barringer a
perfected security interest in 88,260 ("Collateral") of the 432,475 shares of
the Barringer Laboratories, Inc. stock which it continued to hold (the
"Remaining Shares"), to secure certain covenants and agreements of BTI under the
1995 Agreement; and
WHEREAS, in order to maximize Barringer's ability to utilize its net
operating loss carryforwards, BTI agreed in the 1995 Agreement to certain
restrictions upon the further sale and transfer of the Remaining Shares,
including the grant to Barringer of a right of first refusal with respect to the
Remaining Shares; and
WHEREAS, BTI now desires the removal and release of these restrictions on
transferability in order to sell the Remaining Shares; and
WHEREAS, in consideration of BTI's transfer and assignment of the
Collateral to Barringer and of the other terms and conditions of this Agreement,
Barringer will agree to the removal and release of these restrictions on
transferability to the extent set forth herein and Barringer has filed a
registration statement under form S-3 with the Securities and Exchange
Commission to facilitate any desired sale of the Remaining Shares in compliance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of these Recitals and the provisions and
the respective agreements hereinafter set forth, the Parties hereto hereby agree
as follows:
1. REMOVAL AND RELEASE OF PRIOR RESTRICTIONS. Upon the terms and subject
to the conditions set forth in this Agreement, Barringer hereby:
1.1 Waives and releases the restrictions on transferability set forth
in Section 4.4 of the 1995 Agreement respecting the 344,215 shares of the
Barringer Laboratories, Inc. stock which BTI holds. Barringer agrees to
take all action reasonably necessary to cause the reissuance of the stock
certificate(s) evidencing such shares without the restrictive legend noting
the existence of the restrictions set forth in the 1995 Agreement.
1.2 Waives and releases the right granted by BTI in Section 4.5 of the
1995 Agreement to Barringer of a first right to purchase any portion of the
432,475 shares of the Barringer Laboratories, Inc. stock owned by BTI upon
the same terms and conditions of a bona fide offer received by BTI.
<PAGE>
2. TRANSFER AND ASSIGNMENT OF COLLATERAL. Subject to the terms and
conditions set forth herein, BTI hereby sells, assigns, and transfers to
Barringer all of the 88,260 issued and outstanding shares of Barringer's
common stock comprising the Collateral, free and clear of all liens,
encumbrances and adverse claims of whatsoever kind or nature. BTI shall
deliver to Rumler Law Corporation, PC, as set forth in Section 4, below, a
stock assignment in form satisfactory to Barringer, with a medallion
certified signature stamp, sufficient to transfer title to such shares (the
Collateral) to Barringer.
3. RESTRICTIONS ON FUTURE SALE, ASSIGNMENT AND TRANSFER. The parties
acknowledge and agree that it is their intention to maximize Barringer's
ability to utilize its net operating loss carryforwards following the sale of
all or any portion of the 432,475 shares (plus 5,000 additional shares
purchased by BTI since the 1995 Agreement) of the Barringer Laboratories,
Inc. stock which it continues to hold and which are not to be transferred to
Barringer hereunder. Therefore, as a condition to the releases and waivers
described in Section 1 above, BTI agrees that:
3.1 For a period of three (3) months following the date of this
Agreement, and subject to the restriction set forth in Subsection 3.2,
immediately below, BTI agrees that it shall not, nor shall it have any
right to, knowingly sell, assign, transfer or otherwise dispose of more
than 75,000 shares of the Barringer Laboratories, Inc. stock which it owns
to any single purchaser or any affiliated purchasers, without the prior
written consent of Barringer, which Barringer may grant or deny in its
sole and absolute discretion. For purposes of this Agreement, "affiliated
purchasers" shall mean purchasers who, directly or indirectly, influence,
control, are controlled by or are under common control, management or
ownership, with each other. Affiliated Purchasers shall include but not be
limited to voting trusts, relatives of any purchasers, and any director or
officer of a purchaser.
3.2 For a period of three (3) months following the date of this
Agreement, and subject to the restriction set forth in Subsection 3.1,
immediately above, BTI agrees (i) that it shall not, nor shall it have any
right to, sell, assign, or transfer any such shares at a price less than
One and 11/16 Dollars ($1.6875) per share; and (ii) that in the event it
receives an offer to purchase such shares at a price equal to or higher
than the price set forth in 3.2(i), above, BTI shall be required to sell,
assign or transfer such shares, subject to the other restrictions set forth
in this Agreement.
Nothing contained herein shall limit BTI's right or ability to exercise those
certain warrants to purchase additional shares of the common stock of Barringer
according to the terms and conditions set forth in the WARRANTS TO PURCHASE
COMMON STOCK OF BARRINGER LABORATORIES, INC. dated August 29, 1996. BTI
understands and agrees that the subsequent sale by BTI of the shares received
upon the exercise of such warrants, if so exercised, shall be subject to the
terms, conditions and restriction set forth in this Agreement, and shall be
subject to such other restrictions as provided under applicable state and
federal securities laws. Any sale, assignment, transfer or other disposition
of shares of Barringer Laboratories, Inc. stock owned by BTI in contravention of
the terms of this Agreement shall be null and void.
4. CONSUMMATION OF RELEASE AND TRANSFER. As provided in Section 2
above, BTI shall forward to Rumler Law Corporation, PC, the stock assignment
in form satisfactory to Barringer, with a medallion certified signature
stamp, sufficient to transfer title to the Collateral to Barringer. Upon the
subsequent receipt by Rumler Law Corporation PC (i) of executed copies of
this Agreement from each of the Parties; and (ii) of notice, in the form
satisfactory to Rumler Law Corporation, PC., of the proper consent of the
Board of Directors of Barringer,
2
<PAGE>
herein shall become effective. Rumler Law Corporation PC shall then forward
executed copies of this Agreement and the stock power to the proper parties.
5. REPRESENTATIONS AND WARRANTIES OF BTI.
BTI represents and warrants to Barringer as follows:
5.1 EXISTENCE, GOOD STANDING, CORPORATE AUTHORITY, AND VALIDITY OF
AGREEMENTS. BTI is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation. BTI has all
requisite corporate power and authority to own and transfer the Collateral
pursuant to the terms and conditions of this Agreement. This Agreement
constitutes, and all agreements and documents contemplated hereby when executed
and delivered pursuant hereto for value received will constitute, the valid and
legally binding obligations of BTI enforceable in accordance with their terms.
The execution and delivery of this Agreement does not and the consummation of
the transactions contemplated hereby will not (i) require the consent of any
third party, or (ii) result in the breach of any term or provision of, or
constitute a default under, any agreement. Upon transfer of the Collateral by
BTI, Barringer will, as a result, receive good and marketable title to all of
the Collateral, free and clear of all security interests, liens, encumbrances,
charges, assessments, restrictions and adverse claims, except those granted by
Barringer and, those created under applicable securities laws.
5.2 LITIGATION. There are no actions, suits or proceedings at law
or in equity, or before or by any federal, state, municipal or other
governmental agency which affect the Collateral or the BTI's ability to enter
into or perform its obligations hereunder. There are no orders, judgments,
injunctions or decrees of any court or governmental agency with respect to which
BTI has been named or to which BTI is a party, which apply to or restrict BTI's
performance of this Agreement and the transaction contemplated hereunder.
5.3 NO MISREPRESENTATION OR OMISSION. No representation or warranty
by BTI in this Article 5 or in any other Article or Section of this Agreement,
or in any certificate or other document furnished or, if to be furnished by BTI
pursuant hereto upon delivery, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
the statements contained therein not misleading or will omit to state a material
fact.
6. REPRESENTATIONS AND WARRANTIES OF BARRINGER.
Barringer represents and warrants to BTI as follows:
6.1 EXISTENCE, GOOD STANDING, CORPORATE AUTHORITY, AND VALIDITY OF
AGREEMENTS. Barringer is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Barringer
has all requisite corporate power and authority to release and waive the
restrictions and rights set forth herein pursuant to the terms and conditions of
this Agreement. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated hereby will not require the
consent of any third party or violate or conflict with any provision of the
by-laws or articles or certificate of incorporation of Barringer as amended to
the date of this Agreement.
6.2 LITIGATION. There are no actions, suits or proceedings with
respect to Barringer involving claims by or against Barringer which are
pending or threatened against Barringer, at law or in equity, or before or by
any federal, state, municipal or other governmental agency which affect
Barringer's ability to enter into or perform its obligations
3
<PAGE>
hereunder. There are no orders, judgments, injunctions or decrees of any
court or governmental agency with respect to which Barringer has been named
or to which Barringer is a party, which apply to or restrict Barringer's
performance of this Agreement and the transaction contemplated hereunder.
6.3 NO MISREPRESENTATION OR OMISSION. No representation or
warranty by Barringer in this Article 6 or in any other Article or Section of
this Agreement, or in any certificate or other document furnished or, if to
be furnished by Barringer pursuant hereto upon delivery, contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading or will omit to state a material fact.
7. OTHER COVENANTS AND AGREEMENTS.
7.1 INSURANCE MATTERS. The parties hereby agree to terminate any
right: (i) of BTI to insure its employees under Barringer's group health
insurance policy as provided in Section 4.2.1 of the 1995 Agreement; and (ii)
of Barringer to be named an additional insured under BTI's property, casualty
and D&O insurance policies as provided in Section 4.2.2 of the 1995 Agreement.
7.2 RESIGNATION OF DIRECTORS. Promptly after the sale, assignment,
transfer or other conveyance by BTI of an aggregate of 250,000 shares or more
of the issued and outstanding shares of the Barringer Laboratories, Inc. stock
owned by BTI, Stanley S. Binder and John M. Harte shall each immediately resign
as an officer, agent and/or director of Barringer Laboratories, Inc. and
immediately cease to act for or on behalf of Barringer Laboratories, Inc.
Barringer's timely receipt of these resignations shall be a condition subsequent
to the releases and waivers set forth in Section 1 of this Agreement, and BTI's
failure to timely deliver such resignations shall constitute a material breach
of this Agreement.
7.3 INDEMNIFICATION BY BTI. BTI shall to indemnify and hold
Barringer harmless against, and will reimburse Barringer on demand for, any
payment, loss, cost or expense (including reasonable attorney's fees and
reasonable costs of investigation incurred in defending against such payment,
loss, cost or expense or claim therefor) made or incurred by or asserted
against Barringer in respect of any omission, misrepresentation, breach of
warranty, or nonfulfillment or breach of any term, provision, covenant or
agreement on the part of BTI contained in this Agreement, or from any
misrepresentation in, or omission from any document to be furnished to
Barringer pursuant to this Agreement or from the failure of BTI to have and
deliver good and marketable title to the Collateral.
7.4 INDEMNIFICATION BY BARRINGER.
7.4.1 INDEMNIFICATION. Barringer shall to indemnify and hold
BTI harmless against, and will reimburse BTI on demand for, any payment, loss,
cost or expense (including reasonable attorney's fees and reasonable costs of
investigation incurred in defending against such payment, loss, cost or expense
or claim therefor) made or incurred by or asserted against BTI in respect of (i)
any omission, misrepresentation, breach of warranty, or nonfulfillment of any
term, provision, covenant or agreement on the part of Barringer contained in
this Agreement, and (ii) from any misrepresentation in, or omission from, any
document to be furnished to BTI pursuant to this Agreement.
7.4.2 SECURITIES INDEMNIFICATION. Barringer shall indemnify and
hold
4
<PAGE>
harmless BTI against any and all loss, claim, damage or liability, joint or
several, to which BTI may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, or liability (or action with respect
thereto) arises out of or is based upon (a) any untrue statement or alleged
untrue statement of a material fact contained (i) in the Registration Statement,
the Effective Prospectus in respect of the Registration Statement; or (b) the
omission or alleged omission to state in the Registration Statement, the
Effective Prospectus or any amendment or supplement thereto of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and shall reimburse BTI for any legal or other reasonable expenses
incurred by it in connection with investigating or defending against in
connection with any such loss, claim, damage, liability or action,
notwithstanding the possibility that payments for such expenses might later be
held to be improper, in which case the person receiving them shall promptly
refund them; except that the Barringer shall not be liable in any such case to
the extent, but only to the extent, that any such loss, claim, damage, or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Barringer through BTI by or
on behalf of BTI specifically for use in the preparation of the Registration
Statement, the Effective Prospectus or any amendment or supplement thereto.
7.5 RIGHT TO PROVIDE DEFENSE. Promptly after receipt by an
indemnified party under Section 7.3 and/or 7.4 above of written notice of the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such section, notify
the indemnifying party in writing of the claim or the commencement of that
action; the failure to notify the indemnifying party shall not relieve it of any
liability which it may have to an indemnified party, except to the extent that
the indemnifying party did not otherwise have knowledge of the commencement of
the action and the indemnifying party's ability to defend against the action was
prejudiced by such failure. Such failure shall not relieve the indemnifying
party from any other liability which it may have to the indemnified party. If
any such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under such section for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
7.6 CONTRIBUTION. If the indemnification provided for in
Section 7.4.2 herein is unavailable or insufficient to hold harmless an
indemnified party, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims,
damages, or liabilities referred to in Section 7.4.2 above (a) in such
proportion as is appropriate to reflect the relative benefits received by the
Barringer on one hand and BTI on the other from the offering of the securities;
or (b) if the allocation provided by clause (a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect the relative
benefits referred to in clause (a) above but also the relative fault of the
Barringer on the one hand and BTI on the other in connection with the statements
or omissions which resulted in such losses, claims, damages, or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Barringer and BTI shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Barringer bear to the total sales price and received by BTI. Relative
fault shall be determined by reference to, among other things, whether the
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Barringer or BTI and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
5
<PAGE>
prevent such untrue statement or omission. For purposes of this Section 7.6,
the term "damages" shall include any counsel fees or other expenses
reasonably incurred by the Barringer or BTI in connection with investigating
or defending any action or claim which is the subject of the contribution
provisions of this Section 7.6. No person adjudged guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it shall promptly give
written notice of such service to the party or parties from whom contribution
may be sought, but the omission so to notify such party or parties of any such
service shall not relieve the party from whom contribution may be sought from
any obligation it may have hereunder or otherwise (except as specifically
provided in Section 7.6 hereof).
8. MISCELLANEOUS.
8.1 NOTICE. Any notice required or permitted hereunder shall be
in writing and shall be sufficiently given if personally delivered or mailed by
certified or registered mail, return receipt requested, addressed as follows:
If to Barringer: Barringer Laboratories, Inc.
15000 W. 6th Avenue, Suite 300
Golden, CO 80401
Attention: Chief Executive Officer
Copy to: Paul E. Rumler, Esq.
Rumler Law Corporation, P.C.
55 Madison Street, Suite 410
Denver, Colorado 80206
If to BTI: Barringer Technologies, Inc.
219 S. Street
New Providence, NJ 07974
Attention: President
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so personally
delivered or mailed.
8.2 OTHER COSTS AND EXPENSES. All costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
8.3 AUTHORITY TO EXECUTE AGREEMENT. By execution of this
Agreement, each individual who signs this Agreement on behalf his respective
principal individually represents and warrants that (i) he is a duly authorized
officer or agent of his principal, (ii) the principal has taken all action
necessary to approve the covenants, terms and agreements set forth herein, and
(iii) the execution of this Agreement by the undersigned individual shall bind
the principal to the terms and conditions set forth herein.
6
<PAGE>
8.4 EXECUTION OF ADDITIONAL DOCUMENTS. The Parties hereto will
at any time, and from time to time after the date of execution of this
Agreement, upon request of the other party, execute, acknowledge and deliver all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be required to carry out the intent of this
Agreement, and to transfer and vest title to any shares being transferred
hereunder, and to protect the right, title and interest in and enjoyment of all
of the shares sold, granted, assigned, transferred, delivered and conveyed
pursuant to this Agreement; provided, however, that this Agreement shall be
effective regardless of whether any such additional documents are executed.
8.5 BINDING EFFECT; BENEFITS, ASSIGNABILITY. This Agreement
shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective heirs, successors, executors, administrators and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the Parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement. Neither this Agreement nor any of the
Parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other Parties hereto. This Agreement and all
agreements and documents contemplated hereby constitute one agreement and are
interdependent upon each other in all respects.
8.6 ENTIRE AGREEMENT. This Agreement, together with the
other documents contemplated hereby, constitute the final written expression
of all of the agreements between the Parties, and is a complete and exclusive
statement of those terms. It supersedes all understandings and negotiations
concerning the matters specified herein. Any representations, promises,
warranties or statements made by either party that differ in any way from the
terms of this written Agreement and the other documents contemplated hereby,
shall be given no force or effect. The Parties specifically represent, each
to the other, that there are no additional or supplemental agreements between
them related in any way to the matters herein contained unless specifically
included or referred to herein. No addition to or modification of any
provision of this Agreement shall be binding upon any party unless made in
writing and signed by all Parties.
8.7 GOVERNING LAW. This Agreement and all matters and issues
collateral thereto shall be construed according to the laws of the State of
Colorado, except that issues governed by a state's corporate code, including
without limitation matters of corporate governance, shall be governed by the
laws of the Party's state of incorporation.
8.8 MEDIATION; ARBITRATION. Notwithstanding anything to the
contrary herein provided, the Parties agree to submit disputes under this
Agreement which they are unable to resolve to mediation under the Commercial
Mediation Rules of the American Arbitration Association. Any dispute or
controversy arising out of or relating to this Agreement which is not resolved
through mediation shall be submitted and settled by arbitration under the Rules
of Conciliation and Arbitration of the International Chamber of Commerce (the
"ICC") then in effect. There shall be one arbitrator, and such arbitrator shall
be chosen by mutual agreement of the parties in accordance with ICC rules. The
arbitration proceedings shall take place at such location as the Parties shall
mutually agree upon, or if the Parties are unable to agree upon a location, then
Chicago, Illinois. The arbitrator shall apply the laws of the applicable state
to all issues in dispute, in accordance with Section 8.5 hereof. The findings
of the arbitrator shall be final and binding on the parties, and may be enforced
in any court of competent jurisdiction.
8.9 SURVIVAL AND SEVERABILITY. All of the terms, conditions,
warranties and representations contained in this Agreement shall survive, in
accordance with their terms, delivery by Barringer of the consideration to be
given by it hereunder and delivery by BTI of
7
<PAGE>
the consideration to be given by it hereunder, and shall survive the execution
hereof for the period provided herein. If for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid as applied to any particular case or in
all cases, such circumstances shall not have the effect of rendering such
provision invalid in any other case or of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid.
8.10 WAIVERS. Either Barringer or BTI may, by written notice
to the other, (i) extend the time for the performance of any of the obligations
or other actions of the other under this Agreement; (ii) waive any inaccuracies
in the representations or warranties of the other contained in this Agreement or
in any document delivered pursuant to this Agreement; (iii) waive compliance
with any of the conditions or covenants of the other Party contained in this
Agreement; or (iv) waive performance of any of the obligations of the other
Party under this Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any Party, shall be deemed to constitute a
waiver, by the Party taking such action, of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any Party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
8.11 HEADINGS; INTERPRETATION OF AGREEMENT. Headings of the
Articles and Sections of this Agreement are for the convenience of the Parties
only, and shall be given no substantive or interpretive effect whatsoever. The
Parties hereto each represent and acknowledge that they have reviewed this
Agreement with the assistance of their respective counsel. The Parties further
acknowledge that each shall bear co-extensive and identical responsibility for
the language of this Agreement, and that any ambiguity which may exist or
purportedly exist therein shall be attributed equally to the Parties.
8.12 ATTORNEY'S FEES. If any Party shall commence any action or
proceeding against another Party in order to enforce the provisions hereof, or
to recover damages as the result of the alleged breach of any of the provisions
hereof, the prevailing Party therein shall be entitled to recover all reasonable
costs incurred in connection therewith, including, but not limited to,
reasonable attorneys' fees.
8.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument. Evidence of the execution
of this Agreement by any party may be provided by facsimile and if so
provided shall be legal, valid and binding on any party executing in such
manner.
8.14 APPROVAL OF BARRINGER'S BOARD OF DIRECTORS. This Agreement
and the effectiveness and enforceability of the terms and provisions included
herein is specifically contingent upon the approval, by the Board of Directors
of Barringer, no later than October 18, 1996. In the event approval of the
Board of Directors is not attained by such date, this agreement shall be null
and void.
8
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year hereinabove
first set forth.
BARRINGER TECHNOLOGIES, INC.
By: (Illegible)
-----------------------------------
Its: President
BARRINGER LABORATORIES, INC.
By:
-----------------------------------
Its:
9
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year hereinabove
first set forth.
BARRINGER TECHNOLOGIES, INC.
By:
-----------------------------------
Its:
BARRINGER LABORATORIES, INC.
By: (Illegible)
-----------------------------------
Its: CEO
9
<PAGE>
EXHIBIT 23.1
CONSENT OF BDO SEIDMAN, LLP
-52-
<PAGE>
CONSENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Barringer Laboratories, Inc.
Golden, Colorado
We hereby consent to the incorporation by reference in this Registration
Statement of our report dated February 13, 1997 relating to the consolidated
financial statements of Barringer Laboratories, Inc. and subsidiaries
appearing in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
BDO SEIDMAN, LLP
Denver, Colorado
March 24, 1997
<TABLE> <S> <C>
<PAGE>
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 803,000
<SECURITIES> 0
<RECEIVABLES> 1087000
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 1989000
<PP&E> 2917000
<DEPRECIATION> 2487000
<TOTAL-ASSETS> 2494000
<CURRENT-LIABILITIES> 697,000
<BONDS> 0
0
0
<COMMON> 17,000
<OTHER-SE> 1,691000
<TOTAL-LIABILITY-AND-EQUITY> 2,494,000
<SALES> 7,251,000
<TOTAL-REVENUES> 7,251,000
<CGS> 4828,000
<TOTAL-COSTS> 6,489,000
<OTHER-EXPENSES> 26,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 48,000
<INCOME-PRETAX> 736,000
<INCOME-TAX> 26,000
<INCOME-CONTINUING> 710,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 710,000
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
