-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FS/jddI5G4EL3akZeTiiEi+o4I0iLL1x/938nOoK2Z5YZizZ1FMD3J+hP4tqLT62 nnQ0znDqia2ZdIUkuEG8kQ== 0000905718-96-000101.txt : 19960402 0000905718-96-000101.hdr.sgml : 19960402 ACCESSION NUMBER: 0000905718-96-000101 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARRINGER TECHNOLOGIES INC CENTRAL INDEX KEY: 0000010119 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 840720473 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-03207 FILM NUMBER: 96542982 BUSINESS ADDRESS: STREET 1: 219 SOUTH STREET CITY: NEW PROVIDENCE STATE: NJ ZIP: 07974 BUSINESS PHONE: 9086658200 MAIL ADDRESS: STREET 1: 219 SOUTH STREET CITY: NEW PROVIDENCE STATE: NJ ZIP: 07974 FORMER COMPANY: FORMER CONFORMED NAME: BARRINGER RESOURCES INC DATE OF NAME CHANGE: 19910331 FORMER COMPANY: FORMER CONFORMED NAME: BARRINGER RESEARCH INC DATE OF NAME CHANGE: 19800821 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the fiscal year ended December 31, 1995 Commission File Number: 0-3207 Barringer Technologies Inc. (Exact name of registrant as specified in its charter) Delaware 84-0720473 (State or Other (I.R.S. Employer Jurisdiction of Identification No.) Incorporation or Organization) 219 South Street, New Providence, NJ 07974 (Address, Including Zip Code, of Principal Executive Offices) (908) 665-8200 (Registrant's Telephone Number, Including Area Code) 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 Indicate by check mark whether: the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K. [x] The aggregate market value of voting stock held by nonaffiliates of the registrant is $1,346,000 as of March 25, 1996. Indicate the number of shares of each of the issuer's classes of common stock, outstanding as of the latest practicable date. Outstanding as of March 25, 1996 Common Stock, $.01 par value 3,479,131 TABLE OF CONTENTS Page PART I Item 1. Business 3 Item 2. Properties 10 Item 3. Legal Proceedings 11 Item 4. Submission of Matters to a Vote of Security Holders 11 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 11 Item 6. Selected Financial Data 13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 8. Financial Statements and Supplementary Data 23 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 23 PART III Item 10. Directors, Executive Officers, Promoters and Control Persons of the Registrant 23 Item 11. Executive Compensation 25 Item 12. Security Ownership of Certain Beneficial Owners and Management 28 Item 13. Certain Relationships and Related Transactions 30 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K PART I Item 1. Business (a) General Barringer Technologies Inc. and its subsidiaries (except where otherwise indicated, collectively, the "Company") are principally engaged in the following areas of business: (1) the development and marketing of analytical instruments for the high sensitivity detection of chemicals, including explosives and drugs (the "Instruments Business"), conducted by Barringer Instruments, Inc. ("BII") and Barringer Research Ltd., wholly-owned subsidiaries of the Company, and (2) contract research for industrial companies and various government agencies (the "Research and Development Business"). The Company has also recently entered the consumer products business with its consumer product, which is a home drug detection and identification kit. At December 31, 1995, the Company owned 26% of Barringer Laboratories, Inc. ("Labco"). Labco provides comprehensive laboratory-based analytical and consulting services in the United States and Mexico, including environmental monitoring and geochemical analysis for the hydrocarbon and mineral exploration industries. In early 1995, the Company commenced negotiations with respect to a possible sale of its interest in Labco in order to obtain cash to fund its other operations. On December 13, 1995, the Company sold back to Labco 647,238 shares of Labco stock in exchange for cancellation of intercompany obligations and a cash payment. This transaction reduced the Company's investment in Labco from 47% to 26%. Accordingly, the Company reclassified its financial statements, where appropriate, to reflect this operation as an investment in an unconsolidated subsidiary and will account for this investment on the equity method. See Note 2 of the Notes to Consolidated Financial Statements. On August 30, 1995, the Company's stockholders at the Company's Annual Meeting approved a one-for-four reverse stock split, which went into effect on September 25, 1995. Where appropriate, all information has been changed to reflect this action. The Company was incorporated under the laws of the State of Delaware on September 7, 1967. The Company's principal executive office is located at 219 South Street, New Providence, New Jersey 07974 (telephone (908) 665-8200). Recent Developments During 1995, the Company was unable to generate sufficient positive cash flow from operations to meet the Company's cash requirements. As a result, the Company experienced interruptions and inefficiencies in production and continues to obtain extended payment terms from its vendors. If the Company is unable to generate sufficient cash from its operations or other sources, the Company may not be able to achieve its growth objectives and may have to curtail development and marketing activities. On March 28, 1995, the Company introduced its new consumer product, which is an in-home drug detection and identification kit available to consumers that will allow them to determine the presence of illicit drugs from sampled areas. After limited market testing, it became apparent that a successful marketing program has to overcome certain barriers that exist relating to the consumer's reluctance to purchase the product. Management believes that the product has good potential and intends to devote appropriate resources to this product when such resources become available. In the meantime, it is proceeding with limited distribution to further test its packaging and other marketing strategies. However, there can be no assurances that the Company will have the resources to successfully market this product, or that it will be able to overcome the psychological barriers of its intended customers or as to the timing thereof. On May 9, 1995, the Company completed the private placement of its securities to two institutional investors. The private placement consisted of 125 units priced at $6,000 each for an aggregate sales price of $750,000. Each unit ("Unit") consisted of 2,500 shares of the Company's common stock and a five year warrant to purchase 2,500 shares of the Company's common stock at $2.00 per share. In addition, in order to induce the institutional investors to enter into this transaction, an additional three year warrant to acquire 37,500 shares of the Company's common stock at $2.00 per share was issued. On June 30, 1995, the Company completed an additional private placement in which it sold an additional 28 Units, including 22 Units to 7 members of senior management and the Company's Board of Directors, for proceeds aggregating $168,000. This private placement did not include the additional three year warrant. Effective June 30, 1995, the Company, pursuant to the terms of its Certificate of Incorporation, as amended, converted all of the outstanding shares of the Company's convertible preferred stock into shares of the Company's common stock at a conversion ratio of 0.3217 shares of common stock for each outstanding share of convertible preferred stock. As a result, effective June 30, 1995, the Company issued 122,599 shares of common stock in exchange for 381,099 shares of the convertible preferred stock. On August 30, 1995, the Company's stockholders at the Company's Annual Meeting approved a one-for-four reverse stock split of the Company's common stock, which went into effect on September 25, 1995. See Note 7 of Notes to Consolidated Financial Statements. On September 14, 1995, the Company's stockholders, at the reconvened Company's Annual Meeting, approved a proposed amendment to the Company's Certificate of Incorporation to increase the authorized shares of capital stock of the Company. See Note 7 of Notes to Consolidated Financial Statements. On September 28, 1995, the Company entered into an Agreement with the Toronto-Dominion Bank pursuant to which the Bank agreed that the Company's Canadian subsidiary ("BRL") had until September 30, 1995 to come into compliance with certain covenants specified in the Agreement. In exchange, the Company agreed to dispose of its interest in Labco and to remit a portion of the proceeds to BRL. In addition, the Company provided the Bank with additional collateral to secure its advances to BRL. At September 30, BRL was in compliance with these requirements. However, at December 31, 1995 BRL was not in compliance with the minimum working capital requirement and at January 31, 1996 and February 29, 1996, BRL's borrowings under the line of credit exceeded the amount available thereunder. The bank has notified BRL of such default, and without waiving any other remedies available to it, will charge BRL an interest rate of 21% on the excess of such allowable borrowings. Based upon the Company's historical sales patterns and sales through March 22, 1996, BRL anticipates being in compliance with the borrowing formula as of March 31, 1996. However, there can be no assurances that the Company will be in compliance with the terms of the facility or that the Company will remain in compliance in the future. Management believes that the Bank will continue to provide funding according to past practices, however, the Company cannot predict what actions, if any, the Bank may take or as to the timing thereof. See Note 5 of Notes to Consolidated Financial Statements. In March 1996, the Company received notification from NASDAQ that the Company was not in compliance with the minimum $1.00 bid price requirement necessary for continued listing of the Company's shares of common stock on The Nasdaq Stock Market SmallCap Market during the ninety day period ending March 5, 1996. The Company subsequently filed an appeal with NASDAQ to maintain its listing and has furnished additional information requested by the qualifications committee. Management cannot predict the outcome of the appeal. Should the Company be delisted, it would expect to be traded on the Bulletin Board. (b) Financial Information About Industry Segments Reference is made to the information set forth in Note 12 to the Consolidated Financial Statements of the Company included herein for financial information regarding the Company's industry segments. (c) Description of the Company's Business Instruments Business The Company designs, develops and manufactures analytical instruments which are used for security, environmental, earth science and process control applications. The development and design of these analytical instruments have been derived from the Company's contract research and development programs, supplemented by internal funding when appropriate. This business segment carries out product engineering, fabrication, assembly and test functions, and oversees quality control in accordance with strict industrial standards. Revenues generated by the Instruments Business for the years ended December 31, 1993, 1994 and 1995 were $6,761,000, $5,216,000 and $5,250,000, respectively. Operating income (loss) for the years ended December 31, 1993, 1994 and 1995 were $1,709,000, ($1,075,000) and $268,000, respectively. Identifiable assets attributable to the Instruments Business at December 31, 1993, 1994 and 1995 were $6,363,000, $5,486,000 and $7,589,000, respectively. The Company has developed an Ion Mobility Spectrometer ("IONSCAN") for use in the detection of chemicals, including heroin and cocaine, and various types of explosives, including plastiques. The development of the IONSCAN product line has been funded in part by Transport Canada and Revenue Canada. Pursuant to an agreement with the Canadian government, in exchange for the funding provided by Transport Canada and Revenue Canada, Revenue Canada is receiving a royalty payment equal to 1% of sales of all IONSCAN units. Management believes that the success of the IONSCAN product line is essential to the Company's future profitability. The Company is actively marketing the IONSCAN product line in the United States, Canada, Central and South America, Europe, Asia, Africa and the Middle East. The Company has directed its sales and marketing efforts substantially toward Federal, state, local and foreign law enforcement, penal and regulatory agencies as well as toward military agencies. During 1995, the Company has been actively researching new applications for its technology. No assurances can be given as to whether the Company's efforts to expand its sales and marketing in this manner will be effective. The Company has 20 employees responsible for sales and marketing efforts, who are aided by technical support employees as needed. Additionally, the Company has agreements with several independent sales representatives who are marketing IONSCAN instruments in selected areas around the world. The Company has entered into sales representation agreements with Mitsubishi Heavy Industries for certain Far Eastern countries and has established offices in Paris, France for certain European, Middle Eastern and African countries and in the United Kingdom for the United Kingdom, Germany and the Scandinavian countries. The Company also manufactures specialized instruments that cover a wide range of applications in earth sciences, environmental monitoring and on-line process control. Because of their unique character, the Company manufactures and sells a limited number of such instruments, and such instruments constitute an insignificant part of the Company's business. The hardware components of the products marketed by the Instruments Business are not proprietary to the Company, but are generally available products manufactured by third-party suppliers. Management believes that the Instruments Business is not significantly impacted by seasonal variation. The Company expended approximately $182,000, $362,000 and $151,000 on research and development for the Instruments Business in 1993, 1994 and 1995, respectively, substantially all of which related specifically to the development of IONSCAN. All of these amounts were funded by the Company. Customers. The Company's sales of IONSCAN units to date have been substantially to Federal, state and foreign governmental agencies and military agencies. Such sales are dependent upon budgetary allocations for drug interdiction and security efforts. Governmental budgetary processes are unpredictable and have resulted in substantial lead times between the Company's initial marketing and sales efforts and ultimate budgetary approvals for the purchase of IONSCAN units. The Company is attempting to expand its markets to other customers, but to the extent the Company continues to be dependent on orders from governmental agencies and military forces it will continue to be subject to and affected by governmental budgetary processes and constraints. During 1995, no customer accounted for more than 10% of the consolidated revenues of the Company. During 1994, one customer accounted for 10.8% of the consolidated revenues of the Company. During 1993, no customer accounted for more than 10% of the consolidated revenues of the Company. During 1995, five customers in the aggregate accounted for approximately $1,156,000, or 22.2% of revenues attributable to the Instruments Business. During 1994, three customers in the aggregate accounted for approximately $2,095,000 or 40.2% of revenues attributable to the Instruments Business. During 1993, three customers in the aggregate accounted for approximately $2,655,000, or 39%, of revenues attributable to the Instruments Business. Competition. The Company competes with a number of companies, most of which have significantly greater financial, technical, manufacturing and marketing resources than the Company. The principal competitive factors in the market for security devices include technological expertise, price, marketing, ease of use and speed of analysis. The Company believes that it competes effectively within this market based on the price of its IONSCAN product, the product's compact size, ease of use and speed of analysis. Nonetheless, the Instruments Business competes directly with major manufacturers of instruments for security, environmental, earth sciences and process control applications. Because of these considerations, the Company markets its IONSCAN technology and products in cooperation with other larger entities where necessary. The Company's major competitor for IONSCAN technology is Thermedics, Inc. ("Thermedics"). The Company believes that its product is smaller and more competitively priced than the Thermedics product and performs its analysis faster than the Thermedics product. The Company also competes with the present use by various law enforcement agencies of canines to locate the presence of explosives or drugs. Although the strengths of canines are their sensitivity of smell and their ability to follow a trail, the Company believes that IONSCAN is more effective and cost efficient than canines, because IONSCAN can operate 24 hours a day whereas canines can work diligently for only a short period of time. Additionally, IONSCAN has greater selectivity than canines and will identify the substance located by it whereas canines react to various substances but cannot analyze or identify their composition. The Company has little competition in the manufacture of the limited number of non-IONSCAN instruments that it sells in connection with the Instruments Business. Research and Development Business The Research and Development Business, chiefly conducted by Barringer Research Ltd. ("BRL"), the Company's wholly-owned subsidiary, carries out contract research and development for various government agencies and for industries in which financial and other resources are provided primarily by the customer. Presently, a primary objective of the Research and Development Business is to develop new IONSCAN applications which will permit the Instruments Business to penetrate new markets. Revenues generated by the Research and Development Business for the years ended December 31, 1993, 1994 and 1995 were $1,009,000, $298,000 and $1,052,000, respectively. Operating losses for the years ended December 31, 1993, 1994 and 1995 were $56,000, $208,000 and $311,000, respectively. Identifiable assets attributable to the Research and Development Business at December 31, 1993, 1994 and 1995 were $325,000, $302,000 and $275,000, respectively. Management believes that the Research and Development Business is not significantly impacted by seasonal variation. Customers. During each of 1993, 1994 and 1995, no customer of the Research and Development Business accounted for more than 10% of the consolidated revenues of the Company. During 1995, one customer accounted for approximately $962,000 or 91.5% of the revenues attributable to the Research and Development Business; in 1994, three customers in the aggregate accounted for approximately $230,000, or 77.2%, of the revenues attributable to the Research and Development Business; and in 1993, three customers in the aggregate accounted for approximately $517,000, or 51%, of the revenues attributable to the Research and Development Business. Competition. The Company's Research and Development Business competes with a large number of other companies which have substantially greater financial and other resources. The principal competitive factors in this market include quality of results, turnaround time and price. The Company believes that it competes effectively in this area of its business due to its technological expertise in its IONSCAN technology and ability to price its technologies and services competitively. Consumer Products Business On March 28, 1995, the Company introduced its new consumer product, which is an in-home drug detection and identification kit that allows the Company to determine the presence of illicit drugs from sampled areas. The kit contains a specially prepared sample collector that the consumer uses to collect particles from the target surface or objects most likely to contain drug traces, such as desk tops, telephones, door knobs, steering wheels, etc. The consumer then returns the sample to the Company in the sample return bag provided. The Company analyzes the substances captured by the sample collector using its IONSCAN analytical instrument. The consumer is then provided with the results either by mail or by telephone. If the consumer wishes to remain anonymous, he does not have to provide his name and address with the returned sample collector, but can utilize his unique sample number to get the results by calling the Company. The direct response, test marketing program was not considered successful and accordingly, the product is currently being prepared for retail distribution, primarily to pharmacies. The product sells for approximately $35, which includes the cost of analysis. The Company is primarily utilizing its existing personnel in the sales and marketing and administration of this product. It is expected that additional personnel will be added as required. The hardware components of the products marketed by the Consumer Products Business are not proprietary to the Company, but are generally available products manufactured by third-party suppliers. Management believes that the Consumer Products Business is not significantly impacted by seasonal variation. The Consumer Products Business is not yet a significant line of business. Customers. The Company has not yet developed a significant customer base in this line of business. Competition. The Company does not know of any companies currently competing with it in providing non-invasive detection and identification capability. Nonetheless, there are other manufacturers and consumer product companies that have the capability to enter this market, many of which have significantly greater financial, technical, and marketing resources than the Company. Although the Company has just begun operating in this market, the Company believes that the principal competitive factors in this market include marketing, price, accuracy, reputation and turnaround time. Employees As of December 31, 1995, the Company and its subsidiaries had 61 full-time employees and 4 part-time employees. None of the Company's employees is represented by any union, and the Company considers its relationships with its employees to be satisfactory. Patents and Trademarks The Company holds, through BRL, an aggregate of 10 patents throughout the world related to equipment, systems and techniques. While such patents may be regarded as having substantial value, the Company's current business is not deemed to be materially dependent upon either the aggregate of such patents or any one of them. The Company believes that its IONSCAN registered trademark has gained recognition in the markets for the Company's instrument products and is a valuable trademark; however, the Company does not believe that the Instruments Business is dependent on the trademark. Management believes that only segment of the Company's business in which patents play a significant role is the Instrument Business. Backlog As of December 31, the backlog of orders by industry segment believed to be firm was as follows for each of the following years: 1995 1994 Research and Development $ 480,000 $ 1,580,000 Instruments 594,000 - Consumer Products - - $1,074,000 $ 1,580,000 The Company expects to ship all of its backlog in the current year. (d) Financial Information about Foreign and Domestic Operations and Export Sales. For information with respect to financial information about foreign and domestic operations and export sales, reference is made to the information set forth in Note 12 to the Consolidated Financial Statements of the Company included herein, and see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Item 2. Properties. The Company does not own any real property. The Company leases space as follows: Square Annual Lease Footage Lease Expiration Type 219 South Street 4,910 $78,000 March 1998 Sales, service and New Providence, NJ administrative 1730 Aimco Boulevard 28,480 $76,000* August 2005 Office, research Toronto, Ontario, Canada laboratory and manufacturing Aeroport De Paris 1,060 $21,000 January Sales and service Roissytech BP10614-1 Rue Du Cercle 95724, Roissy C.D.G., France Manor Royal 1,560 $9,000 February 1998 Sales and service Crawley, West Sussex England RH10 2QU ________________________ * Increases to $115,000 on September 1, 2000 Item 3. Legal Proceedings None. 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 fourth quarter of the year ended December 31, 1995. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters The Common Stock is quoted on the NASDAQ interdealer quotation system (small cap listing). Its symbol is BARR. On March 22 , 1996, there were approximately 964 holders of record of the Common Stock. The following table sets forth the high and low bid quotations per share of Common Stock for each quarter of the two fiscal years ended December 31, 1994 and 1995 as reported by NASDAQ and adjusted to reflect the one-for-four reverse stock split effected September 25, 1995 (such quotations reflect inter-dealer prices, without retail markup, markdown or commission, and may not necessarily represent actual transactions). Common Stock High Low 1994 First Quarter................... $11.24 $9.00 Second Quarter.................. 9.24 6.00 Third Quarter................... 6.76 4.00 Fourth Quarter.................. 4.52 2.00 1995 First Quarter................... $6.88 $1.25 Second Quarter.................. 5.00 2.00 Third Quarter................... 4.25 2.25 Fourth Quarter.................. 3.25 0.50 In March 1996, the Company received notification from NASDAQ that the Company was not in compliance with the minimum $1.00 bid price requirement necessary for continued listing of the Company's shares of common stock on The Nasdaq Stock Market SmallCap Market during the ninety day period ending March 5, 1996. The Company subsequently filed an appeal with NASDAQ to maintain its' listing and has furnished additional information requested by the qualifications committee. Management cannot predict the outcome of the appeal. Should the Company be delisted, it would expect to be traded on the Bulletin Board. The Company has not paid cash dividends on the Common Stock and does not anticipate paying cash dividends on the Common Stock in the foreseeable future. The Company is prohibited from paying cash dividends on the Common Stock unless full cumulative dividends have been paid or set aside for payment on the Company's Class A Convertible Preferred Stock and Class B Convertible Preferred Stock, which dividends, at the option of the Company, are payable in cash or shares of the Common Stock. The Company is further restricted from paying cash dividends under the terms of an Indenture between the Company and The Colorado National Bank of Denver as Trustee, dated July 15, 1981, under which the Company's 12-1/2% Subordinated Convertible Debentures were issued. The Company's ability to pay dividends may also be limited in the future by any legal or contractual restrictions placed on the abilities of its subsidiaries to pay dividends to the Company. Item 6. Selected Financial Data The following selected consolidated financial data have been derived from the Company's consolidated financial statements for each of the five years ended December 31, 1995. These selected financial data should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements, related notes and other financial information included elsewhere herein. The information presented herein has been reclassified to reflect Labco as being accounted for under the equity method of accounting. SELECTED FINANCIAL DATA Years Ended December 31, 1995 1994 1993 1992 1991 (in thousands, except per share data) OPERATIONS STATEMENT Sales of goods and services $6,374 $5,514 $ 7,770 $2,838 $1,963 Costs of goods and services 3,804 4,269 3,930 2,211 1,703 Gross profit 2,570 1,245 3,840 627 260 Operating expenses 3,456 3,714 3,299 2,341 3,365 Income (loss) from operations (886) (2,469) 541 (1,714) (3,105) Other income (expense) (292) (89) (101) (49) (219) Income tax benefit (provision) - (75) 153 - - Income (loss) from continuing operations $(1,178 $(2,633) $ 593 $(1,763) $(3,324) PER SHARE DATA (1991 - 1994 restated to reflect reverse stock split) Income (loss) per share from continuing operations $ (0.39) $(0.97) $ 0.20 $(0.92) $ (1.84) Weighted average shares 3,283 2,827 2,570 2,135 1,862 outstanding (in thousands) BALANCE SHEET DATA 1995* 1994 1993 1992 1991 Working capital (deficit) $ 370 $ 652 $2,912 $ 27 (1,027) Current assets 3,672 5067 7,000 2,835 2,639 Total assets 4,735 6,792 8,939 4,805 3,983 Current liabilities 3,302 4,415 4,088 2,808 3,666 Long-term liabilities 10 451 581 759 344 Shareholders' equity (deficit) 1,325 1,186 3,646 709 (27) * Barringer Laboratories was held for sale and not consolidated in 1995. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 1995 Compared to 1994 Sales of all instruments increased by $34,000, or 0.07%. Sales of Ionscan instruments and related product decreased by approximately $200,000, or 3.9% on increased unit sales of approximately 60%. This was due to the selling price of the new Model 400 IONSCAN, which was introduced in the first quarter of 1995, being priced approximately 30% less than the Model 350 which was the only available product during 1994. This reduction in selling price, coupled with the unit being smaller, lighter and containing more features, has resulted in significantly more unit sales. Sales of instruments other than Ionscan products increased by approximately $240,000 principally due to the award in 1995 of the heavy water analyzer contract, which will be completed in mid-1996. The Company has been successful in selling many of its older Model 350 units, but still has a significant number of units remaining in its inventory. Accordingly, the Company has reduced the carrying value of the remaining finished units. Although management believes that it will dispose of substantially all of its Model 350 inventory by the end of 1996, there can be no assurance that such sales will occur as planned or the price at which such sales may occur. Revenues of the research and development business increased by approximately $754,000, or 253.0%. The improved sales are attributable to work performed under the Company's contract with the Emergencies Science Division, Environment Canada to design and build an airborne laser-fluorosensor system The contract has a value of approximately Cdn. $1,967,000, with a substantial portion of that Contract being billed in 1995. The Company's Consumer products business, formed in March 1995, did not achieve significant sales during 1995. After limited market testing, it became apparent that a successful marketing program has to overcome certain barriers that exist relating to the consumer's reluctance to purchase the product. Management believes that the product has good potential and intends to devote appropriate resources to this product, when such resources become available. In the meantime, it is proceeding with limited distribution to further test its packaging and other marketing strategies. The Company does not anticipate significant sales of this product in 1996 and there can be no assurance that markets for this product will develop or as to the timing thereof. Gross profit for all businesses as a percentage of sales for the year ended December 31, 1995 increased to 40.3% from 22.6% in 1994. The gross profit as a percentage of sales for the Research and Development business improved to a negative 14.2% from a negative 44.6% in 1994. The improvement was due to higher volume absorbing a greater portion of the fixed overhead. The gross profit as a percentage of sales for the Instruments business increased to 53.1% from 26.4%. The 1995 gross profit was impacted by the write down of the carrying value of the Model 350 inventory aggregating approximately $450,000 of which approximately $160,000 relates to excess spare parts inventory and the balance to finished goods partially offset by an $800,000 charge against its Model 350 inventory taken in 1994. The Consumer Products Business had negative gross profit due primarily to the expensing of tooling, software and other development costs. Selling, general and administrative expenses in 1995 decreased by approximately $47,000, or 1.4% over 1994. Selling expenses increased by $759,000, or 48.3%. The increase is primarily attributable to the expenses associated with the Company's French and United Kingdom offices being open for a full year and the marketing associated with the DrugAlert product. General and administrative expenses decreased by approximately $806,000, or 45.3% over 1994. This reduction was attributable primarily to a Canadian pension recovery of $147,000 relating to the 1993 conversion of the Canadian pension plan from a defined benefit plan to a money purchase plan; a reduction in accounts payable of $226,000 relating to a settlement of professional fees and the effect of staff and expense reductions implemented in late 1994. Unfunded research and development in 1995, applied to IONSCAN technology, decreased by approximately $211,000, or 58.3%. The 1994 level was attributable to the completion of the development of the Company's new Model 400. The level of unfunded research and development engaged in by the Company is primarily a function of the availability of resources, both financial and personnel, that is available at the time. Interest expense increased by approximately $38,000, or 18.8% over 1994 levels. The increase is the result of higher levels of borrowing, at higher interest rates. Other expense, net of income in 1995 was approximately $52,000 as compared to other income, net of expense in 1994 of approximately $113,000. The difference of $165,000 was attributable primarily to the changes in exchange rates which generated a gain of $135,000 in 1994 compared to a loss of $79,000 in 1995. The balance of the differences relate to several different accounts of income and expense that may not recur from year to year. 1994 Compared to 1993 Sales of all instruments for 1994 decreased by $1,545,000 or 22.8%, over 1993. The decrease was attributable to several factors. Management believed that the pending introduction of the Company's new Model 400 IONSCAN caused a deferral of purchases until the Model 400 was available. Furthermore, because the Company relies upon sales to governmental agencies, which are subject to mandated procurement processes and budgetary constraints, the selling cycle for its products often extends over long periods, which can result in significant variations in quarterly sales. The Company believed its sales in the fourth quarter of 1994 were significantly impacted by these factors. Because of the announcement of the Model 400, the Company anticipated that its remaining Model 350's will be sold at lower prices over a longer period of time than previously expected. Accordingly, it offered reduced prices to certain customers as inducements to secure more timely purchase commitments and had reduced prices on outstanding quotations in order to expedite buying decisions. Based upon the favorable initial reaction to its Model 400, the Company believed that the Company's instrument sales will increase in 1995. In addition, in late March 1995, the Company's Canadian operation received a contract to build 4 heavy water analyzers for use at a nuclear facility in Asia. The contract is valued at Cdn. $984,000 with delivery in mid-1996. See Item 1, "Business -- Description of the Company's Business." Revenues of the Research and Development Business decreased by $711,000, or 70.5%, in 1994 compared to 1993. Most of the Company's past research and development projects have been from Canadian governmental agencies. Many of these agencies experienced budget cutbacks which reduced the amount of research and development funds available. However, the Company has been awarded a contract to design and build an airborne laser-fluorosensor system, by the Emergencies Science Division, Environment Canada. The contract has a value of approximately Cdn. $1,967,000, with a substantial portion of that Contract being billed in 1995. The Company has several proposals outstanding involving potential new applications of its IONSCAN technology with U.S., Canadian and European governmental agencies. As a result of these factors, 1995 revenues for the Research and Development Business were significantly improved from 1994. Gross profit for the Instrument and Research and Development Businesses as a percentage of sales for the year ended December 31, 1994 decreased from 49.4% in 1993 to 22.6% in 1994. The gross profit as a percentage of sales on the Research and Development Business decreased from 6.5% to a negative 44.6% and the gross profit as a percentage of sales on the Instruments Business decreased from 55.8% to 26.4%. As a result of the decline in the value of its inventory of Model 350s, which resulted from the introduction of the Model 400, the Company has provided approximately $800,000 in inventory and other charges against the remaining inventory of Model 350s. This charge reduced the Instruments Business's gross profit percentage by approximately 15.3%. The remaining decrease in gross profit percentage was due primarily to volume variances as a result of cutbacks in planned Model 350 production to meet the anticipated reduction in sales levels. Selling, general and administrative expenses in 1994 increased by $235,000, or 7.5%, over 1993. Selling expenses decreased by $274,000, or 14.9%, as a result of reduced commissions resulting from reduced unit sales during 1994, offset in part by the expenses incurred in connection with the opening of the Company's Paris office. General and administrative expenses increased by $509,000, or 40%, primarily as a result of the impact of Canadian pension expense of approximately $100,000 in 1994 against a pension credit of $206,000 in 1993, which was the result of converting from a defined benefit plan to a money purchase plan similar to the 401(k) savings plans available to the Company's U.S. employees. Also, payroll costs increased during the first three quarters of the year, in anticipation of increased volume which did not materialize. Subsequently, significant staff reductions were implemented. In addition, a reserve against accounts receivable of approximately $110,000 was established. Unfunded research and development in 1994, applied to IONSCAN technology, doubled to $362,000 from 1993 levels. The increase was primarily attributable to the development of the Company's new Model 400 instrument. Interest expense increased by $38,000, or 23.2%, as a result of higher average borrowings and rising interest rates. Other income, net of expense, in 1994 was $113,000 as compared to $34,000 in 1993, an increase in other income of $79,000 or 232%. Although this category consists of several different accounts of income and expense that may not recur from year to year, the single biggest increase in income was in the foreign exchange account which increased by $99,000. Sales of IONSCAN units are quoted in U.S. dollars, while production costs are in Canadian dollars. As a result of the weakening of the Canadian dollar against the U.S. dollar during 1994, substantial foreign exchange gains were realized. In 1994, the Company had a net reduction in its Canadian deferred tax assets of $75,000. In 1993, the Company had a net tax benefit of $153,000, composed of prior years' assessments by Revenue Canada of $147,000 and a net recognition of $300,000 in Canadian deferred tax assets. Capital Resources and Liquidity Operating Activities The Company incurred substantial net losses during the three years ending December 31, 1992, primarily as a result of the Company's change in its business strategy from airborne exploration to development of analytical specialty instruments, especially an advanced proprietary Ion Mobility Spectrometer called IONSCAN (See Item 1, "Business"). For the year ended December 31, 1993, the Company recorded its first year of profitability in recent history, with a recorded net income of $595,000. The Company was unable to sustain profitability and incurred net losses of $2,565,000 and $827,000, for the years ended December 31, 1994 and 1995, respectively. As a result of the continuing losses, the Company continues to experience periodic severe cash shortages. The Company has cut operating expenses and restructured its payments to suppliers to conserve cash. The Company follows the practice of manufacturing to a sales forecast and, as a result, may have an inventory imbalance when sales are not realized in the same time frame as units are manufactured. In December 1995, the Company completed a sale of a portion of its investment in Labco. The proceeds were added to working capital. The Company will endeavor to sell its remaining interest in Labco, subject to the conditions contained in the Stock Purchase Agreement. See Note 2 of Notes to Financial Statements for additional information. Financing Activities In the past, the Company has obtained financing through the private sale of its equity securities and from working capital lines of credit. On May 9, 1995, the Company completed the private placement of its securities to two institutional investors. The private placement consisted of 125 units priced at $6,000 each for an aggregate sales price of $750,000. Each unit ("Unit") consisted of 2,500 shares of the Company's common stock and a five year warrant to purchase 2,500 shares of the Company's common stock at $2.00 per share. In addition, in order to induce the institutional investors to enter into this transaction, an additional three year warrant to acquire 37,500 shares of the Company's common stock at $2.00 per share was issued. On June 30, 1995, the Company completed an additional private placement in which it sold an additional 28 Units, including 22 Units to 17 members of senior management and the Company's Board of Directors, for proceeds aggregating $168,000. This private placement did not include the additional three year warrant. Effective June 30, 1995, the Company, pursuant to the terms of its Certificate of Incorporation, as amended, converted all of the outstanding shares of the Company's convertible preferred stock, par value $1.25 per share, into shares of the Company's common stock, par value $0.01 per share, at a conversion ratio of 0.3217 shares of common stock for each outstanding share of convertible preferred stock. As a result, effective June 30, 1995, the Company issued 122,599 shares of common stock in exchange for 381,099 shares of the convertible preferred stock. On August 30, 1995, the Company's stockholders at the Company's Annual Meeting approved a one-for-four reverse stock split, which went into effect on September 25, 1995. See note 7 of Notes to Consolidated Financial Statements. Both the Company and its Canadian subsidiary have substantial tax loss and research and development tax credit carryforwards to offset projected 1995 and 1996 tax liabilities. The Company has been experiencing cash flow shortages since mid-1994. This is the result of the need for capital to support higher levels of accounts receivable and inventory caused primarily by uneven sales patterns during the quarters. This situation was exacerbated by the Company's converting its production from its Model 350 IONSCAN to its newly introduced Model 400 IONSCAN. The Company needs additional amounts of capital in order to proceed with product and applications development. During 1995 the Company did not generate positive cash flow from operations. During the middle of the year, the Company was able to generate additional cash to meet its cash requirements through a private equity placement. If additional capital is required in the future in excess of cash generated by operations, the Company presently intends to raise such additional capital through the private placement of its equity and/or debt securities and/or the sale of the remaining stock in its 26% ownership in Labco. However, there can be no assurances that the Company will be able to raise the needed capital or as to the terms or timing thereof. On September 28, 1995, the Company entered into an Agreement with the Toronto-Dominion Bank pursuant to which the Bank agreed that the Company's Canadian subsidiary ("BRL") had until September 30, 1995 to come into compliance with certain covenants specified in the Agreement. In exchange, the Company agreed to dispose of its interest in Labco and to remit a portion of the proceeds to BRL. In addition, the Company provided the Bank with additional collateral to secure its advances to BRL. At September 30, BRL was in compliance with these requirements. However, at December 31, 1995 BRL was not in compliance with the minimum working capital requirement and at January 31, 1996 and February 29, 1996, BRL's borrowings under the line of credit exceeded the amount available thereunder. The bank has notified BRL of such default, and without waiving any other remedies available to it, will charge BRL an interest rate of 21% on the excess of such allowable borrowings. Based upon the Company's historical sales patterns and sales through March 22, 1996, BRL anticipates being in compliance with the borrowing formulas as of March 31, 1996. However, there can be no assurances that the Company will be in compliance with the terms of the facility or that the Company will remain in compliance in the future. Management believes that the Bank will continue to provide funding in accordance with past practices, however, the Company cannot predict what actions, if any, the Bank may take or as to the timing thereof. The Company's 12-1/2% Convertible Subordinated Debentures ("Debentures"), in the principal amount of $300,000 comes due on July 15, 1996. Although the Company believes that it will be able to generate sufficient cash in order to repay the principal when due, there can be no assurances that it will be able to do so in the time necessary to avoid a default under the terms of the Debentures. If the Company has insufficient funds to repay the Debentures, it will seek amendments, waivers, extensions, modifications and/or other measures in order to prevent such default. However, there can be no assurances that the Company will be successful in preventing such a default. Investment Activities Purchases of fixed assets for the years 1993, 1994 and 1995 were $120,000, $490,000 and $359.000, respectively. During this three-year period, the investments made by the Company were primarily for IONSCAN related equipment. During 1995, the incremental cash required for the DrugAlert product line was approximately $75,000. The Company anticipates that for 1996 it will require approximately $150,000 in fixed asset additions. The Company has no major commitments for capital purchases at this time. The funds required for this equipment would be provided by financing or investment activities. Pursuant to the terms of a Stock Purchase Agreement, dated December 8, 1995, between the Company and Labco, on December 13, 1995 the Company sold to Labco 647,238 shares of Labco's common stock for an aggregate purchase price of $809,000. The purchase price consisted of $300,000 in cash, cancellation of all amounts owed by the Company to Labco pursuant to certain intercompany agreements and cancellation of $57,000 in accounts receivable due to Labco. The proceeds were added to working capital. The Company continues to own approximately 26% of Labco's common stock outstanding. See note 2 of Notes to Consolidated Financial Statements for additional information. Inflation Inflation was not a material factor in either the sales or the operating expenses of the Company during the periods presented herein. Disclosure Regarding Forward Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements. Certain information in Items 1, 2, 3, 7 and 8 of this Form 10-K includes information that is forward looking, such as the Company's opportunities to increase sales through among other things, the development of new applications and markets for its Ionscan equipment and technology, its success with its DrugAlert product line, exposure to fluctuations in foreign currencies and periodic liquidity and capital requirements. The matters referred to in forward looking statements could be affected by the risks and incertainties involved in the Company's business. These risks and uncertainties include, but are not limited to, the effect of economic and market conditions, the impact of both foreign and domestic governmental budgeting decisions and the timing thereof the ability of the Company to successfully develop abd market new product applications and the ability of the Company to comply with the covenants of its loan agreements as well as certain other risks described in Item 7 in "Managements Discussion and Analysis of Financial Condition and Results of Operations." Subsequent written and oral forward looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this Form 10-K. Item 8. Financial Statements and Supplementary Data. Financial statements and supplementary financial information are contained on pages __ through ___. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. Not applicable. PART III Item 10. Directors and Executive Officers of the Registrant. Name Position with the Company and Affiliates Director Since Stanley S. Binder Director, President and Chief Executive 1991 Officer of the Company; Director of Barringer Laboratories, Inc. ("Labco"). John H.Davies Director and Executive Vice President 1992 of the Company; President and Chief Executive Officer of Barringer Research Ltd. John J. Harte Director and Vice President, 1986 Special Projects, of the Company; Chairman of the Board of Labco. Richard D. Condon Director of the Company 1992 John D. Abernathy Director of the Company 1993 James C. McGrath Director of the Company 1994 Richard S. Rosenfeld Vice President-Finance, Chief Financial Officer, Treasurer and Assistant Secretary of the Company -- Kenneth S. Wood Vice President and Secretary of the Company; President of Barringer Instruments, Inc. ("BII") --
Mr. Stanley S. Binder, 54, is a Director and the President and Chief Executive Officer of the Company. He is also a Director of Labco. From July 1977 to May 1989, Mr. Binder served as Chief Financial Officer to Keystone Camera Products Corporation, Clifton, New Jersey, and its predecessors, the principal business of which was the manufacture of low cost point and shoot cameras. Keystone Camera Products Corporation filed a petition for protection under the bankruptcy laws in January 1991. In July 1989, Mr. Binder joined the Company and has since held the following offices with the Company: President from 1989 to the present date, Chief Operating Officer from 1989 to June 1990, Chief Financial Officer from 1989 until July 1993, and Chief Executive Officer from July 1990 to the present date. Mr. Binder is also an independent general partner in the Special Situations Fund III, L.P., a substantial investor in the Company. See Item 13, "Certain Relationships and Related Transactions." Mr. John H. Davies, 60, is a Director and Executive Vice President of the Company and the President and Chief Executive Officer of Barringer Research Ltd.("BRL"). Mr. Davies joined BRL in 1967 and has been an Executive Vice President and Director of the Company since January 1992. Mr. Davies has served BRL as a Vice President, and a Senior Vice President; and currently as BRL's President (since 1984) and Chief Executive Officer (since August 1989). Mr. John J. Harte, 54, is a Director and Vice President, Special Projects, of the Company and Chairman of the Board of Labco, and has held such positions since joining the Company and Labco in 1986. He is a certified public accountant and, since 1978, has been and continues to be a Vice President of Mid-Lakes Distributing Inc., a manufacturer and distributor of heating and air conditioning parts and equipment located in Chicago, Illinois. Mr. Richard D. Condon, 61, has been a Director of the Company since February 1992. From 1989 through 1995, he has worked as a consultant to and director of Analytical Technology, Inc., Boston, Massachusetts, a scientific instrumentation company. Mr. John D. Abernathy, 59, a Director of the Company since October, 1993, is a certified public accountant and, since January 1995, has been Executive Director of Patton Boggs LLP, a law firm. He is also a Director of Oakhurst Capital, Inc., a distributor of automotive parts and accessories; and since June 1995, he has been a Director of Wahlco Environmental Systems, Inc. which designs, manufactures and sells air pollution control and power plant efficiency equipment. From March 1994 to January 1995, he was a financial and management consultant. From March 1991 to March 1994, he was the Managing Director of Summit Solomon & Feldesman, a law firm in dissolution since March 1993. From July 1983 until June 1990, Mr. Abernathy was Chairman and Chief Executive Partner of BDO Seidman, a public accounting firm. Mr. James C. McGrath, 53, a Director of the Company since January 1994, is an international security consultant. Since July 1989, he has been President of McGrath International, Inc., a management consulting firm specializing in the security field. Mr. Richard S. Rosenfeld, 49, is a certified public accountant and has been Vice President-Finance and Chief Financial Officer of the Company since July 1993; he has also been the Treasurer and Assistant Secretary of the Company since January 1992, and was a consultant to the Company from July 1991 to December 1991. From July 1984 to October 1990, he was Controller, Vice President-Finance, for Keystone Camera Products Corporation, Clifton, New Jersey, the principal business of which was the manufacture of low cost point and shoot cameras. Keystone Camera Products Corporation filed a petition for protection under the bankruptcy laws in January 1991. Mr. Kenneth S. Wood, 45, has been a Vice President of the Company and the President of BII since January 1992 and the Secretary of the Company since March 1993. He was Vice President of Operations for BII from April 1990 to January 1992. From July 1978 until April 1990, he was Program Director for Lockheed Electronics, the principal business of which is aerospace and defense electronics. All Directors are elected by the holders of the Company's common stock, par value $.01 per share ("Common Stock"), the Company's Class A convertible preferred stock, par value $2.00 per share ("Class A Convertible Preferred Stock"), and the Company's Class B convertible preferred stock, par value $2.00 per share ("Class B Convertible Preferred Stock"), to serve one (1) year terms or until their successors shall be elected and shall qualify. Mr. Binder has an employment and consulting agreement with the Company. See Item 11, "Certain Compensation Arrangements." Other officers serve at the discretion of the Board of Directors. There are no family relationships among any of the directors and executive officers. Under Section 16(a) of the Securities Exchange Act of 1934, the Company's directors, executive officers, and persons holding more than ten percent of the Company's Common Stock are required to report their initial ownership of the Company's Common Stock and any changes in such ownership to the Securities and Exchange Commission. These persons also are required to furnish the Company with a copy of all Section 16(a) forms they file. The Company is obligated to disclose any failures to, on a timely basis, file such reports. To the Company's knowledge, based solely on a review of such reports and any amendments thereto which have been furnished to the Company, the Company has not identified any reports required to be filed during the 1995 fiscal year that were not filed on a timely manner. Item 11. Executive Compensation. Executive Officer Compensation. The following table sets forth the compensation paid for the past three fiscal years to the President and Chief Executive Officer of the Company and each other executive officer of the Company whose total annual salary and bonus are $100,000 or more: SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Other Annual Restricted Securities Name and Principal Compen- Stock Underlying LTIP All Other Position Year Salary Bonus sation Awards Options Payouts Compensation(1) Stanley S. Binder 1995 $171,491 - - - 45,000 - $ 5,940 President and Chief 1994 167,757 - - - - - 5,940 Executive Officer 1993 148,272 $17,400 - - - - 5,492 John H. Davies 1995 125,775* - $12,149 - 31,250 - Executive Vice 1994 120,582* - - - - - 5,741* President of the 1993 115,785* 15,600 - - - - Company; President and Chief Executive Officer of Barringer Research Ltd. Kenneth S. Wood 1995 114,190 - - - 26,250 - 2,283 Vice President and 1994 109,751 - - - - - 2,436 Secretary of the 1993 97,874 14,400 - - - 2,386 Company; President of Barringer Instruments, Inc. Richard S. Rosenfeld 1995 96,000 - - - 22,500 - 4,410 Vice President Finance, 1994 90,400 - - - - - 4,545 Treasurer and Chief 1993 68,094 12,600 - - - - 1,976 Financial Officer of the Company
___________________________ * Amounts converted to US dollars at the average exchange rate for the respective year. (1) Represents amounts contributed by the Company pursuant to the Company's tax-qualified 401(k) deferred compensation plan ("401(k) Plan"). The 401(k) Plan provides that the Company will make matching contributions to the participants in the 401(k) Plan equal to 100% of the first 2% of a participant's salary contributed and 50% of the next 5% of a participant's salary contributed, which contributions vest proportionately over a five year period commencing at the end of the participant's first year with the Company. The other annual compensation for Mr. John Davies represented the payment of previously accrued and unpaid vacation pay. The following table summarizes certain information relating to the grant of options to purchase Common Stock to each of the executives included in the Summary Compensation Table above. None of such options is presently exercisable.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1) Individual Grants Percent of Total Number of Options/SARs Potential Realizable Values Securities Granted to Exercise At Assumed Annual Rates of Underlying Employees in or Base Stock Price Appreciation for Name Options/SARs Fiscal Year(3) Price Expiration Option Term Granted (#)(2) ($/sh) Date 5%($) 10%($) _______________________________________________________________________________________________________________________ Stanley S. Binder 45,000 24.80% $2.00 3/10/2000 $25,865 $54,946 John H. Davies 31,250 17.20% $2.00 3/10/2000 $17,268 $38,157 Kenneth S. Wood 26,250 14.50% $2.00 3/10/2000 $14,505 $32,052 Richard S. Rosenfeld 22,500 12.40% $2.00 3/10/2000 $12,432 $27,473 (1) The Company did not grant any stock appreciation rights in 1995. (2) For a description of certain terms of the options listed above, see Note 7 of Notes to Consolidated Financial Statements. (3) Options covering a total of 181,375 Shares of Common Stock were granted in 1995. The following table sets forth information with respect to the executive officers named in the foregoing Summary Compensation Table concerning the exercise of stock options during 1995 and unexercised options held by such executive officers as of December 31, 1995, the end of the last fiscal year: AGGREGATED OPTION EXERCISES IN 1995 AND FISCAL YEAR-END OPTION VALUES Individual Grants Value of Unexercised in-the-Money Number of Securities Options at Underlying Unexercised Year-End Shares Acquired Value Options at Year-end Exercisable/ Name On Exercise Realized(1) Exercisable/Unexercisable Unercisable Stanley S. Binder - - 0/45,000 - John H. Davies - - 0/31,250 - Kenneth S. Wood - - 3,000/38,250 - Richard S. Rosenfeld - - 1,250/27,500 - _______________________________ (1) Dollar values are calculated by determining the difference between the fair market value of the Common Stock underlying the options and the exercise price of the options on the date of exercise. The Company's Canadian subsidiary, Barringer Research Ltd., maintained a defined benefit pension plan for its Canadian employees that was terminated on December 31, 1993. Mr. Davies was a participant in that plan. His projected annual benefit at age 65 has been set at approximately Cdn. $74,000, which amount may be subject to change only in response to changes in the Canadian pension regulatory scheme. Directors' Compensation. The Board has adopted a compensation plan for outside directors. Outside directors are entitled to an annual retainer paid at the rate of $2,500 per quarter and a fee of $1,000 for each meeting attended. In addition, outside directors are eligible to participate in the 1991 Warrant Plan (as described below). Although Mr. Harte is a non- employee director, he does not participate in the Company's compensation plan for non-directors. Mr. Harte receives a fee of $2,000 per month for services he renders to the Company, and a fee of $1,000 for each meeting he attends in his capacity as a director. The Board of Directors has adopted the 1991 Directors Warrant Plan (the "1991 Warrant Plan"). Under the 1991 Warrant Plan, each non-employee director, upon election or appointment to the Board, will be sold, at $0.40 per warrant, 3,750 warrants, each of which may be exercised within five years to purchase one share of Common Stock at an exercise price to be determined by the Board at the time of such sale, which exercise price shall not be less than the market price for the shares underlying the warrants at the time of issuance of such warrants. The 1991 Warrant Plan provides that each such new director shall use the first quarterly director's fees to pay the purchase price for such warrants. Certain Compensation Arrangements. The Company has entered into an Employment and Consulting Agreement with Stanley S. Binder, the President and Chief Executive Officer of the Company, (the "Employment Agreement"), pursuant to which Mr. Binder receives compensation for his services as President of the Company at an initial annual rate of $120,000, subject to increases equal to percentage increases in the Consumer Price Index as well as by increases authorized by the Company's Executive Compensation Committee. Mr. Binder's annual salary effective May 31, 1994 is $171,491. The Employment Agreement renews automatically each year, unless either party gives the other six months prior written notice of non-renewal. In addition, the Employment Agreement provided for the grant to Mr. Binder of an option to purchase 25,000 shares of Common Stock at an exercise price of $4.00 per share, which approximated market value at the time that the Employment Agreement was executed. The Employment Agreement also provided that the Company would grant to Mr. Binder a non-qualified option to purchase 25,000 shares of Common Stock at an exercise price of $8.00 per share, subject to anti-dilution provisions, which option would become exercisable immediately as to all shares subject thereto. Such non-qualified option has been exercised by Mr. Binder, pursuant to the Stock Option Exercise Program. See Item 13, "Certain Relationships and Related Transactions." Mr. Binder does not receive any additional compensation for his services to Labco. During 1995, Mr. Binder received a non-qualified option to purchase 45,000 shares of the Company's common stock at $2.00 per share. Compensation Committee Interlocks and Insider Participation. The Company's Executive Compensation Committee (the "Committee") is comprised of Messrs. Abernathy, Harte and McGrath. During the fiscal year ended December 31, 1995, Mr. Harte was also the Vice President, Special Projects, of the Company. Messrs. Abernathy and McGrath were not officers or employees of the Company during fiscal 1995. The Company owns a 26% common share equity interest in Labco. Mr. Harte is Chairman of the Board of Labco, and Mr. Binder is a Director of Labco. Mr. Binder served on the compensation committee of Labco's Board of Directors during fiscal 1995. Except as described in the preceding sentence, no executive officer of the Company and no member of the Committee is a member of any other business entity that has an executive officer that sits on the Company's Board or on the Committee. On April 21, 1994, Mr. Binder exercised options to purchase 37,500 shares of Common Stock pursuant to the Stock Option Exercise Program, in exchange for which Mr. Binder executed notes payable to the Company in the amount of $203,000. In 1995, for the period in which no interest accrued on the amounts payable to the Company (from January 1, 1995 through April 21, 1995), Mr. Binder received benefits of $5,469 under the Stock Option Exercise Program, representing interest otherwise payable on such $203,000. See Item 12, "Certain Relationships and Related Transactions" for a description of the Stock Option Exercise Program. In April of 1993, the Company had provided to Mr. Binder an unsecured demand loan of $20,000 in connection with the incurrence by Mr. Binder of tax liability upon exercising certain of his non-qualified stock options. That loan did not bear interest for the first year, after which interest accrued at a rate equivalent to the then current prime rate. Item 12. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth, as of March 1, 1996, the number of shares of Common Stock, Class A Convertible Preferred Stock and Class B Convertible Preferred Stock owned by each director and all directors and executive officers as a group and any persons (including any "group" as used in Section 13(d)(3) of the Securities Exchange Act of 1934) known by the Company to own beneficially 5% or more of such securities. As of March 1, 1996, there were 3,479,131 shares of Common Stock, 82,500 shares of Class A Convertible Preferred Stock and 257,500 shares of Class B Convertible Preferred Stock issued and outstanding. As of that date, none of the officers and directors owned shares of the Company's Class A Preferred Stock, or any of the Company's Convertible Debentures.
Common Stock Class A Convertible Class B Convertible Total Common Stock and Preferred Stock Preferred Stock Common Stock Equivalent(1) Name of Beneficial Owner Number Percent of Number of Percent of Number of Percent of Number of Percent of Shares Class Shares Class Shares Class Shares Class Stanley S. Binder 50,000 1.4 - - - - 107,500(2) 3.0 John H. Davies 53,279 1.5 - - - - 97,029 2.8 John J. Harte 22,500 * - - - - 46,250 1.3 Richard D. Condon 5,000 * - - - - 21,250 * John D. Abernathy 4,000 * - - - - 17,750 * James C. McGrath 5,000 * - - - - 21,250 * Kenneth S. Wood 10,000 * - - - - 51,250 1.5 Richard S. Rosenfeld 5,400 * - - - - 39,150 1.1 All directors and executive officers as a group consisting of eight (8) persons 155,179 4.5 - - - - 401,429 10.8 Special Situations Fund III, L.P. 369,553 10.6 - - - - 626,220 16.8 153 E. 53rd St. NY, NY 10022 Special Situations 83,333 2.4 - - - - 176,666 4.9 Cayman Fund LP 153 E 53rd St. NY, NY 10022 John R. Purcell - - 100,000 38.3 32,290 1.2 700 Canal Street Stamford, CT 06902-5921 11,527 Herbert Boeckmann II 155595 Roscoe Blvd. 8,337 60,000 23.3 27,711 * Sepulveda, CA 93134-6503 Colman Abbe c/o Hampshire Grp 3,477 - - - 25,000 9.7 15,300 * 919 3rd Ave. NY, NY 10022 Nancy A. Abbe c/o Hampshire Grp 516 * - - 25,000 9.7 8,589 * 919 3rd Ave. NY, NY 10022 R.R. Bowlin 14,984 * - - 25,000 9.7 23,057 * Ft. Wayne, IN Esther & Carlos Otto 1,694 * 14,060 17.0% - - 6,337 * Cheyenne, WY Elizabeth Butenschoen 1,538 * 6,530 7.9% - - 3,694 * Colfax, CA ______________________________________________________________________________________________________________________ *Less than 1%
(1) Common Stock Equivalents for each person or entity assumes the exercise of all outstanding warrants for Common Stock, the conversion of each outstanding share of Convertible Preferred Stock, Class A Convertible Preferred Stock and Class B Convertible Preferred Stock into Common Stock and the issuance of all shares of Common Stock subject to options for such person or entity. (2) Does not include 369,553 shares of Common Stock owned by Special Situations Fund III, L.P., of which Mr. Binder is an Independent General Partner. Mr. Binder disclaims any beneficial interest in such shares. Item 13. Certain Relationships and Related Transactions Under the Company's policies and procedures set forth by the Board of Directors for reviewing related party transactions, any transaction between the Company and its respective officers, directors or principal stockholders must be on terms no less favorable to the Company than can be obtained from unaffiliated third parties and must be approved by a majority of the disinterested directors of the Company. Loans will not be made to officers, directors or 5% stockholders except those made pursuant to the Company's Stock Option Exercise Program (as described below) and those made for bona fide business purposes. The Company believes that these measures ensure that the terms of any related party transaction will be at least as fair as those that could be obtained in arm's length transactions, unless intended to constitute additional compensation to the parties involved. In connection with the Company's stock option plan, the Board of Directors has approved a stock option exercise program ("Stock Option Exercise Program"). The Stock Option Exercise Program permits all employees of the Company and its subsidiaries who are granted stock options (pursuant to either qualified or non-qualified plans) to finance the exercise of such options by causing the Company to issue the shares underlying such options upon receipt by the Company from the employee of a note evidencing indebtedness to the Company in an amount equal to the exercise price. Such loans, which are secured by the underlying shares of Common Stock, are interest-free for one year from the date on which the employee exercises his option, after which interest accrues at rate per annum equivalent to the prime rate, which rate is changed monthly. Pursuant to the Stock Option Exercise Program, on April 21, 1994, Mr. Binder and Mr. Wood exercised options to purchase 37,500 shares, of Common Stock and 10,000 shares of Common Stock, respectively, in exchange for which Mr. Binder and Mr. Wood executed notes payable to the Company in the amount of $203,000 and $71,600, respectively. In 1995, for the period in which no interest accrued to the Company (from January 1, 1995 through April 21, 1995 ), Mr. Binder and Mr. Wood received benefits of $5,469 and $1,929 respectively, under the Stock Option Exercise Program, representing interest otherwise payable on such notes. On May 9, 1995 the Company sold to the special Situations Fund III, L.P. ("SSF III"), a current shareholder and an investment group of which Mr. Binder is an Independent General Partner, and to the Special Situations Fund Cayman, L.P., an affiliate of SSF III (collectively, with SSF III, "SSF"), an aggregate of 125 units at a purchase price of $6,000 per unit for an aggregate purchase price of $750,000. Each unit consists of 2,500 shares of Common Stock and a five-year warrant to purchase 2,500 shares of Common Stock at $2.00 per share, subject to certain anti-dilutive provisions. As an inducement to enter into the transaction and in lieu of a transaction fee, the Company also issued to SSI warrants, exercisable for three years, to purchase an aggregate of 37,500 shares of Common Stock at $2.00 per share, subject to certain anti-dilutive provisions. In addition, on June 30, 1995, the company sold 22 units to certain officers and directors of the Company for an aggregate purchase price of $132,000. Such units were identical to those sold to SSF. For information relating to Mr. Binder's indebtedness to the Company. See Item 11, "Compensation Committee Interlocks and Insider Participation" above. Pursuant to the terms of a Stock Purchase Agreement, dated December 8, 1995 ("Agreement"), by and between the Company and Labco on December 13, 1995 the Company sold to Labco 647,238 shares of Labco's common stock for an aggregate purchase price of $809,000. The purchase price consisted of $300,000 in cash, cancellation of all amounts owed by the Company to Labco pursuant to certain intercompany agreements (aggregating $452,000) and cancellation of $57,000 in accounts receivable due to Labco. After giving effect to the sale of the Labco shares, the Company continued to own 432,475 shares of Labco stock. Mr. John Harte is Chairman of the Board of Labco and Mr. Stanley Binder is a Director of Labco. See Note 2 of Notes to Consolidated Financial Statements. For a description of certain other relationships, see Item 11, "Management -- Compensation Committee Interlocks and Insider Participation." PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(1) Financial Statements. The following financial statements of Barringer Technologies Inc. are included in Part II, Item 8, and set forth on Pages 27 through 45 of this report. Report of Independent Certified Public Accountants Consolidated Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993. Consolidated Balance Sheets - December 31, 1995 and 1994 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993. Notes to Consolidated Financial Statements (a)(2) Financial Statement Schedule. The following schedule is set forth on page 46 filed herewith: Schedule II - Valuation and Qualifying Accounts All other schedules called for by Regulation S-X are not submitted because they are not applicable or not required or because the required information is not material or is included in the financial statements or notes thereto. (b) Reports on Form 8-K. Item 5. Other Events - On December 27, 1995, the Company filed a Form 8-K regarding the sale of a portion of its stock ownership in Barringer Laboratories, Inc. (c) Exhibits. 3.1A The Company's Certificate of Incorporation, as amended. 3.2A By-law of the Company. (1) 4.16 Indenture between the Company and the Colorado National Bank of Denver as Trustee, (4) dated July 15, 1981. 4.17 Unit Purchase Agreement and Forms of Warrant Agreements by and between the Company , Special Situations Fund III, L.P. and (7) Special Situations Cayman Fund, L.P. dated May 9, 1995. 4.18 Form of Warrant Agreement by and between the Company and Ontario Development Corporation. (7) 4.19 Form of Subscription Agreement and Form of Warrant Agreement by and between the Company and each of Stanley S. Binder, John H. Davies, Richard S. Rosenfeld, Helene Hollub, (7) Adam Street Joint Venture, Richard D. Condon, John J. Harte, John D. Abernathy and James C. McGrath. 4.20 Form of Warrant Agreement by and between the Company and Barringer Laboratories, Inc. (7) 10.15 Employment Agreement, dated as of July 10, 1989, between the Company and Stanley S. (1) Binder. 10.16 Barringer Resources, Inc. 1990 Stock Option (3) Plan. 10.24 License Agreement dated February 27, 1989 between Canadian Patents and Development Limited - Societe Canadienne Des Brevets Et (2) D'Exploitation Limite and Barringer Instruments Limited. 10.25 Contribution Agreement dated December 22, 1989 by and among Defense Industial Research Program, the Department of National Defense, (2) Barringer Research Limited and Barringer Instruments Limited. 10.31 Form of Stock Purchase Agreement dated as of November 30, 1992 by and between the Company (5) and certain accredited investors. 10.33 Stock Purchase Agreement dated as of February 2, 1993 by and between the Company (5) and Special Situations Caymans Fund, L.P. 10.34 Form of Stock Purchase Agreement dated as of December 13, 1993 by and between the Company (5) and certain accredited investors. 10.36 Loan Agreement dated September 20, 1994 between Ontario Development Corporation and (6) Barringer Research Limited. 10.37 Credit Facility between the Company and the (8) Toronto Dominion Bank 10.38 Agreement between the Toronto-Dominion Bank and Barringer Technologies Inc. and (9) Barringer Research Limited dated September 28, 1995. 21 Subsidiaries of Barringer Technologies Inc. 23.1 Consent of Independent Certified Public Accountants 23.2 Consent of Independent Certified Public Accountants 27 Financial Data Schedule ____________________________ (1) Incorporated by reference to the identically numbered exhibit to the Registrant's Registration Statement on Form S-1, File No. 33-31626. (2) Incorporated by reference to the identically numbered exhibit to the Registrant's Registration Statement on Form S-l , File No.33-43094. (3) Incorporated by reference to Exhibit 10.25 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 0-3207. (4) Incorporated by reference to Exhibit 4.3 to Registration Statement on Form S-1, File No. 2-70458. (5) Incorporated by reference to the identically numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, File No. 0-3207. (6) Incorporated by reference to the identically numbered exhibit to the Registrant's Annual Report 10-K for the fiscal year ended December 31, 1994, File No. 0-3207. (7) Incorporated by reference to the identically numbered exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1995, File No. 0-3207. (8) Incorporated by reference to Exhibit 10.36 to the Company's Annual Report on Form 10-K/A-1 for the fiscal year ended December 31, 1994, File No. 0-3207. (9) Incorporated by reference to the Exhibit 10.1 to the Company's Form 8-K filed on October 13, 1995, File No. 0-3207. SIGNATURES Pursuant to the requirements of 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 TECHNOLOGIES INC. By:/s/Stanley S. Binder Stanley S. Binder, President and Chief Executive Officer Dated: March 29, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, 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 Title Date /s/ Stanley S. Binder President, Chief March 29, 1996 ______________________ Executive Officer Stanley S. Binder and Director /s/ John D. Abernathy ______________________ Director March 29, 1996 John D. Abernathy Director March 29, 1996 /s/ Richard D. Condon ______________________ Richard D. Condon Director March 29, 1996 /s/ John H. Davies ___________________ Director March 29, 1996 John H. Davies /s/ John J. Harte _________________ John J. Harte Director March 29, 1996 /s/ James C. McGrath _____________________ Director March 29, 1996 James C. McGrath /s/ Richard S. Rosenfeld ________________________Vice President-Finance, March 29, 1996 Richard S. Rosenfeld Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) INDEX TO FINANCIAL STATEMENTS Page Financial Statement Report of Independent Certified Public Accountants 27 Consolidated Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993 28 Consolidated Balance Sheets - December 31, 1995 and 1994 29 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1995, 1994 and 1993 31 Consolidated Statements of Cash Flows for the Years Ended December 31, 1995 32 Notes to Consolidated Financial Statements 33 Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Barringer Technologies Inc. New Providence, New Jersey We have audited the accompanying consolidated balance sheets of Barringer Technologies Inc. as of December 31, 1995 and 1994 and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. We have also audited the schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule 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 and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Barringer Technologies Inc. at December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein. BDO SEIDMAN, LLP WOODBRIGE, NEW JERSEY MARCH 27, 1996 BARRINGER TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 1994 1993 Sales $ 6,374,000 $ 5,514,000 $7,770,000 Cost of Sales 3,804,000 4,269,000 3,930,000 _______________________________________________ Gross profit 2,570,000 1,245,000 3,840,000 _______________________________________________ Operating expenses: Selling, general and administrative 3,305,000 3,352,000 3,117,000 Unfunded research and development 151,000 362,000 182,000 _______________________________________________ 3,456,000 3,714,000 3,299,000 _______________________________________________ ( 886,000) (2,469,000) 541,000 Other income (expense) Interest expense (240,000) (202,000) (164,000) ( 52,000) 113,000 63,000 ________________________________________________ Other (292,000) (89,000) (101,000) Income (loss) before income tax provision (benefit) (1,178,000) (2,558,000) 440,000 Income tax provision (benefit) (note 8) - 75,000 (153,000) ________________________________________________ Income (loss) from continuing operations (1,178,000) (2,633,000) 593,000 Operation held for sale (note 2) Income from operations 258,000 68,000 2,000 Gain on sale of a portion of investment 93,000 - - ________________________________________________ 351,000 68,000 2,000 Net income (loss) (827,000) (2,565,000) 595,000 Preferred stock dividends (82,000) ( 108,000) (114,000) ________________________________________________ Net income (loss) attributable to common shareholders $(909,000) $ (2,673,000) $ 481,000 ================================================== Per Share Data (Note 1): Continuing operations Operation held for sale: $ (0.39) $ (0.97) $ 0.20 Operations 0.08 0.02 - Gain 0.03 - - ___________________________________________________ $ (0.28) $ (0.95) $ 0.20 =================================================== Weighted average shares outstanding 3,283,000 2,827,000 2,570,000 =================================================== See notes to consolidated financial statements.
BARRINGER TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEETS ASSETS DECEMBER 31, 1995 1994 Current Assets: Cash $ 43,000 $ 267,000 Receivables, less allowances of $41,000 and $539,000 (note5) 1,533,000 2,565,000 Inventories 1,621,000 1,790,000 Prepaid expenses and other 250,000 220,000 Deferred tax asset (note 8) 225,000 225,000 ____________________________________ Total current assets 3,672,000 5,067,000 Property and equipment, net (note 4) 586,000 1,364,000 Investment in unconsolidated subsidiary (note 2) 334,000 - Other 143,000 361,000 _______________________________________ $ 4,735,000 $ 6,792,000 ======================================= See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY DECEMBER 31, 1995 1994 Current Liabilities: Bank indebtedness and other notes (note 5) 744,000 1,160,000 Accounts payable 1,278,000 1,632,000 Accrued liabilities 723,000 949,000 Accrued payroll and related taxes 257,000 444,000 Current portion of long-term debt (note 6) 300,000 230,000 ___________________________ Total current liabilities 3,302,000 4,415,000 Other non-current liabilities 108,000 451,000 Minority interest in subsidiary (note 2) - 740,000 Commitments and contingencies (note 9 and 10) Shareholders' equity (notes 6 and 7): Convertible preferred stock $1.25 par value, 1,000,000 shares authorized, 0 and 444,000 shares outstanding, respectively - 555,000 Class A convertible preferred stock,$2.00 par value, 1,000,000 shares authorized, 83,000 shares outstanding, less discount of $64,000 101,000 101,000 Class B convertible preferred stock, $2.00 par value, 730,000 shares authorized, 258,000 and 318,000 shares outstanding, respectively 515,000 635,000 Common Stock, $0.01 par value, 7,000,000 and 5,000,000 shares authorized, respectively and 3,479,000 and 2872,000 shares outstanding, respectively 35,000 29,000 Additional paid-in capital 17,685,000 16,036,000 Accumulated deficit (16,542,000) (15,633.000) Cumulative foreign currency translation adjustment (456,000) (524,000) _______________________________ 1,338,000 1,199,000 Less: common stock in treasury, at cost, 31,000 shares (13,000) (13,000) ______________________________ Total shareholders' equity 1,325,000 1,186,000 _______________________________ $ 4,735,000 $ 6,792,000 ================================= See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands) Common stock Preferred stock Class A Class B Paid in Accu Foreign Trea. pfd stk pfd stk Total equity shrs am't shrs am't shrs am't shrs am't capital deficit Transl stock Balance at December 31, 1992 $ 709 2,423 $ 24 452 $ 564 166 203 471 941 12,765 (13,441) $(325) $(22) Exercise of stock options/warrants 1,315 156 2 1,313 1993 dividend on 0 11 114 (114) preferred stock Conversion of preferred stock to common 0 63 1 (7) (9) (83) (102) (153) (306) 416 Subscription receivable payments 100 100 Sale of common stock in private placement, net 768 109 1 767 Sale of treasury stock 225 208 17 Net income 595 595 Translation adjustments (66) (66) ____________________________________________________________________________________________________ Balance December 31, 1993 3,646 2,762 28 445 555 83 101 318 635 15,683 (12,960) (391) (5) Exercise of stock options/ warrants 168 72 1 167 Issuance of common stock pursuant to settlement of 1993 litigation 70 12 78 (8) 1994 dividend on preferred stock 0 26 108 (108) Net Loss (2,565) (2,565) Translation adjustment (133) (133) ______________________________________________________________________________________________________ Balance December 31, 1994 1,186 2,872 29 445 555 83 101 318 635 16,036 (15,633) (524) (13) Sale of units in private placement, net 888 383 4 884 Conversion of preferred stock 0 159 2 (445) (555) (60) (120) 673 Change in warrant exercise price in payment of debt 10 10 1995 dividend on preferred stock 0 65 82 (82) Net loss (827) (827) Translation adjustment 68 68 _____________________________________________________________________________________________________ $1,325 3,479 35 0 $ 0 83 $ 101 258 $ 515 $17,685*$(16,542) $(456) $ (13) ======================================================================================================= * At December 31, 1995, net of notes receivable of $274 from the sale of stock.
See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1995 1994 1993 Operating Activities: Net income (loss) $(827,000) $(2,565,000) 595,000 Items not affecting cash: Depreciation and amortization 362,000 711,000 625,000 Inventory write-down and receivable reserves 656,000 1,210,000 - Minority interest - ( 76,000) (2,000) Income and gain from operation held for sale (351,000) - - Pension expense (recovery) (147,000) - (92,000) Deferred tax expense - 75,000 (300,000) Prepaid pension cost (78,000) 132,000 (132,000) Other 71,000 235,000 (2,819,000) Decrease (increase) in non-cash working capital balances: (397,000) 206,000 (2,819,000) ______________________________________ Cash used in operating activities (711,000) (72,000) (2,152,000) ______________________________________ Investing Activities Purchase of equipment and other (358,000) (847,000) (498,000) Escrowed cash on sale of Canadian subsidiary - 225,000 (225,000) Proceeds on sale of partial interest in Labco 300,000 Proceeds on sale of equipment 25,000 _______________________________________ Cash used in investing activities (58,000) (622,000) (698,000) _______________________________________ Financing Activities Reduction in long-term debt - (184,000) (43,000) Increase (decrease) in bank debt and other (412,000) 488,000 407,000 Proceeds on issuance of securities and other 888,000 171,000 2,308,000 Rent inducement 108,000 - - Receipt of subscriptions receivable - - 100,000 Cash provided by financing activities 584,000 475,000 2,772,000 _____________________________________ Decrease in cash (185,000) (219,000) (78,000) Cash-beginning of year 267,000 486,000 564,000 Less cash held for sale (39,000) _____________________________________ Cash-end of year $ 43,000 $ 267,000 486,000 ===================================== Changes in components of non-cash working capital balances related to operations: Receivables $ 38,000 1,249,000 $ (3,075,000) Inventories (281,000) (987,000) (593,000) Other current assets 60,000 ( 58,000) (50,000) Other assets (12,000) - - Accounts payable and accrued liabilities (202,000) 2,000 899,000 _____________________________________ Decrease (increase) in operating assets net of operating liabilities arising from cash transactions $(397,000) 206,000 (2,819,000) ====================================== See notes to consolidated financial statements. 1. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements comprise the accounts of the Company and its continuing subsidiary companies. All intercompany transactions have been eliminated. Principles of Translation Assets and liabilities of the Company's foreign subsidiaries are translated by using year-end exchange rates and income statement items are translated at average exchange rates for the year. Translation adjustments are accumulated in a separate component of shareholders' equity. Inventories Materials and supplies are carried at the lower of average cost or replacement cost. Finished goods and work-in process are carried at the lower of average cost or net realizable value. Property and Equipment Property and equipment are carried at cost. Depreciation of owned equipment is computed on a straight-line basis over the estimated useful lives of the related assets, generally from three to ten years. Leasehold improvements are amortized over the term of the related lease, generally from five to ten years, which approximates the useful lives of these improvements. Equipment under capital leases is amortized on a straight-line basis over the term of the lease, generally four to ten years, which approximates the estimated useful lives of the leased equipment. Per Share Data Income (loss) per common share is based on the weighted average number of common shares outstanding and where dilutive, includes common share equivalents outstanding. Statement of Cash Flows For purposes of the Statement of Cash Flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Revenue Recognition The Company recognizes revenue on the percentage of completion method for its research and development contracts with progress measured based on the ratio of costs incurred to the total estimated cost, and generally, when product is shipped for all other sales. Where the Company receives contracts for the design and construction of specialty instruments that require long manufacturing times, the Company will also recognize revenue on the percentage of completion method similar to its recognition method in the research and development business. For the year ended December 31, 1995, the Company had recognized revenues of $264,000 on jobs in process and had incurred related costs of $183,000, of which $210,000 were billed to customers at December 31, 1995. Financial Instruments and Credit Risk Concentration Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. Concentrations of credit risk with respect to such receivables are limited to primarily governmental agencies. Long-Lived Assets Long-lived assets, such as property and equipment, are evaluated for impairment when events of changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value. This policy is in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of", which is effective for the fiscal years beginning after December 15, 1995. No write-downs have been necessary through December 31, 1995. Stock Based Compensation The Company does not presently intend to adopt the fair value based method for accounting for stock compensation plans as permitted by Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation", which is effective for transactions entered into in fiscal years that begin after December 15, 1995. Fair Value of Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturity of these finance instruments. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Many of the Company's estimates and assumptions used in the financial statements relate to the Company's products, which are subject to technology and market changes. It is reasonably possible that changes may occur in the near term that would affect management's estimates with respect to inventories and equipment. 2. Investment in Unconsolidated Subsidiary During the first quarter of 1995, the Company started to actively seek a purchaser for its then 47% interest in Barringer Laboratories, Inc ("Labco"). Accordingly, the financial statements had been reclassified, where appropriate, to reflect Labco as an operation held for sale. Pursuant to the terms of a Stock Purchase Agreement, dated December 8, 1995 ("Agreement"), by and between the Company and Labco, on December 13, 1995 the Company sold to Labco 647,238 shares of Labco's common stock for an aggregate purchase price of $809,000, resulting in a gain of $93,000. The purchase price consisted of $300,000 in cash, cancellation of all amounts owed by the Company to Labco pursuant to certain intercompany agreements (aggregating $452,000) and cancellation of $57,000 in accounts receivable due to Labco. After giving effect to the sale of the Labco shares, the Company continued to own 432,475 shares of Labco stock. Under the terms of the Agreement, all intercompany agreements between the Company and Labco terminated and certain collateral securing the Company's obligations thereunder was returned to the Company. However, pursuant to the terms of the Agreement, Labco retained 88,260 shares of Labco stock owned by the Company. In the event that Labco meets certain pre-tax earnings goals for 1996, those shares will be returned to the Company. If Labco does not meet such goals, all or a portion of such shares will be retained by Labco. The Company has considered the value of the retained shares in the computation of its gain on the sale of the Labco shares, and has reduced its gain accordingly. The Company also agreed to terminate all voting arrangements allowing it to vote shares of Labco stock not owned by it and agreed for a period of 24 months not to enter into any such voting arrangements. In addition, the Company granted Labco a right of first refusal until January 2, 1997 giving Labco the right, for a period of thirty days, to purchase shares of Labco stock owned by the Company in the event that the Company wishes to sell any additional shares. In connection with such right, the Company agreed to certain restrictions on the transferability of any Labco stock owned until January 2, 1997. The right of first refusal and the related restrictions will terminate upon the first to occur of (a) the sale, within twelve months of the date of the Agreement, of Labco stock sufficient to give any one person or entity ownership of 50% or more of the Labco stock, or (b) the change of more than three members of the Board of Directors of Labco, other than as a result of resignation, during any twelve month period after the date of the Agreement. After the transaction described above, the Company presently retained a 26% ownership interest in the common stock of Labco and will report Labco under the equity method of accounting. The following are the condensed results of operations and condensed balance sheet for Labco. Condensed Results of Operations For the year ended December 31, 1995 1994 Revenues $ 6,758,000 $5,941,000 Costs and expenses 6,198,000 5,797,000 ___________________________ 560,000 144,000 Minority interest (302,000) (76,000) _____________________________ Net income attributable to investment $ 258,000 $ 68,000 ============================= Condensed Balance Sheet December 31, 1995 Current assets $1,362,000 Property and equipment, net 541,000 Other noncurrent assets 47,000 __________ Total assets $1,950,000 ========== Current liabilities $ 908,000 Long-term liabilities 33,000 Equity 1,009,000 _________ Total liabilities and equity $1,950,000 =========== 3. Inventories At December 31, 1995 and 1994, the Company had work in process of $1,010 ,000 and $982,000, and finished goods of $611,000 and $808,000, respectively. 4. Property and Equipment The major categories of property and equipment are as follows (in 000's): December 31, 1995 1994 Owned: Office equipment $ 350,000 $ 359,000 Machinery and equipment 1,687,000 2,856,000 Leasehold improvement 64,000 1,012,000 ________________________ 2,101,000 4,227,000 Accumulated depreciation (1,515,000 (3,279,000) ________________________ 586,000 948,000 ________________________ Capital leases: Machinery and equipment - 912,000 Accumulated amortization - (496,000) ________________________ - 416,000 ________________________ Totals $ 586,000 $ 1,364,000 ======================== 5. Bank Indebtedness, Other Notes and Accrued Liabilities The Company's Canadian subsidiary, Barringer Research Ltd. ("BRL"), has a financing arrangement with the Ontario Development Corporation ("ODC") for a Cdn $1,000,000 export line of credit. BRL may borrow up to Cdn $1,000,000 on a formula basis of 90% of export accounts receivable plus 70% of the value of export purchase orders (subject to Cdn $300,000 sub-limit). The rate of interest is adjusted quarterly and was 11.0% at December 31, 1995. At December 31, 1995, US$448,000 was borrowed and the line was fully utilized to the extent of available collateral. BRL also has a line of credit financing arrangement with the Toronto-Dominion Bank ("Bank") that provides up to Cdn $1,000,000 based on eligible receivables. The rate of interest is Canadian prime plus 1.5% (9% at December 31, 1995). At December 31, 1995, US$295,000 was borrowed. At December 31, 1995, the Company had an additional availability of approximately $100,000 under this facility. This facility is guaranteed by the Company. Commencing in March, 1995, BRL had not been in compliance with the collateral coverage covenant of the loan agreement. The amount of funds borrowed were in excess of the amount allowed pursuant to the collateral formula. At that time, the Bank agreed to give BRL approximately six months to come back into compliance. During this time, the Bank continued to finance BRL's needs. On September 28, 1995, the Company entered into an agreement ("Agreement") with the bank, pursuant to which the Bank agreed that the BRL may have until September 30, 1995 to come into compliance with certain amended covenants specified in the Agreement and to maintain such requirements thereafter. In exchange, the Company agreed to remit 50% of the net proceeds realized on the sale of a portion of its stock in Labco (see Note 2) to BRL. In addition, the Company agreed to provide the Bank with additional collateral to secure its advances to BRL making substantially all the assets of the Company pledged as collateral. As of September 30, 1995, BRL was in compliance with such covenants. However, at December 31, 1995 BRL was not in compliance with the minimum working capital requirement and at January 31,1996 and February 29, 1996, BRL's borrowings under the line of credit exceeded the amount available thereunder. The bank has notified BRL of such default, and without waiving any other remedies available to it, will charge BRL an interest rate of 21% on the excess of such allowable borrowings. Based upon the Company's historical sales patterns and sales through March 22, 1996, BRL anticipates being in compliance with the borrowing formula as of March 31, 1996. However, there can be no assurances that BRL will be in compliance with the terms of the facility or that the Company will remain in compliance in the future. Management believes that the Bank will continue to provide funding according with past practices, however, the Company cannot predict what actions, if any, the Bank may take or as to the timing thereof. Accrued liabilities consisted of the following at December 31,: 1995 1994 Accrued commissions 27,000 404,000 Accrued other 696,000 545,000 _____________________ $ 723,000 $ 949,000 ===========+========= 6. Long-term Debt and Other Liabilities Long-term debt consists of the following at December 31,: 1995 1994 12 1/2% Convertible subordinated $ 300,000 $ 300,000 debentures (a) Capital leases - 344,000 Other (b) 108,000 37,000 ___________________ 408,000 681,000 Less: Current portion (300,000) (230,000) ____________________ $ 108,000 $ 451,000 ===================== (a) The 12 1/2% Convertible Subordinated Debentures are due July 17, 1996 and are convertible at face amount into common stock any time before maturity at $32.00 per share (9,375 shares of common stock reserved at December 31, 1995). Under the terms of the Indenture, the Company may not pay cash dividends, nor any payment on account of the purchase, redemption or other acquisition or retirement of its capital stock. (b) Other long-term liabilities in 1995 represents rents payable on the Company's Canadian facility. 7. Shareholders' Equity Private Offering On May 9, 1995, the Company completed the private placement of its securities to two institutional investors. The private placement consisted of 125 units priced at $6,000 each for an aggregate sales price of $750,000. Each unit ("Unit") consisted of 2,500 shares of the Company's common stock and a five year warrant to purchase 2,500 shares of the Company's common stock at $2.00 per share. In addition, in order to induce the institutional investors to enter into this transaction, an additional three year warrant to acquire 37,500 shares of the Company's common stock at $2.00 per share was issued. On June 30, 1995, the Company completed an additional private placement in which it sold an additional 28 Units, including 22 Units to 17 members of senior management and the Company's Board of Directors, for proceeds aggregating $168,000. This private placement did not include the additional three year warrant. Due from Officers/Shareholders In connection with the exercise of options to acquire 190,000 shares of the Company's Common Stock, two officers of the Company signed full recourse interest bearing (no interest the first year, prime rate thereafter) unsecured promissory demand notes aggregating $274,000 that was available to them under the Company's stock option purchase program. Under that program the Company has arranged for a market-maker in the Company's Common Stock, to coordinate the orderly sale in the open market of a portion of the Common Stock to be received by the employees upon the exercise of their options in an amount sufficient to repay the loan and related interest. As of December 31, 1995, the notes were still outstanding. Common Stock Outstanding or Reserved for Issuance The following table sets forth the number of shares of Common Stock outstanding as of December 31, 1995 as well as the number of shares of Common Stock that would be outstanding in the event that all of the options and warrants are exercised and all Series of Convertible Preferred Stock and Debentures are converted into Common Stock. Exercise, Common stock conversion outstanding or option or reserved price for issuance Common stock 3,479,131 Convertible subordinated notes $32.00 9,375 Class A convertible preferred stock $0.38 108,983 Class B convertible preferred stock $0.39 332,587 Stock options (I) $2.00 to $14.00 234,500 Private placement warrants (ii) $2.00 420,000 Other warrants (iii) $4.00 to $14.23 68,750 ________________ Total 4,653,326 ================ (I) Stock Options - Pursuant to the Company's 1990 Stock Option Plan the Company may issue both incentive stock options and qualified stock options. Options granted are exercisable after the expiration of two years from the date of grant and until the expiration of five years after the date of grant. Options are exercisable only during the optionee's employment with the Company or a subsidiary of the Company. The Company may also grant stock options to consultants as authorized by the Board of Directors. These options are exercisable at varying times from date of grant and expire five years from date of grant. During 1995, non-qualified options to purchase 181,375 shares at a price of $2.00 per share were issued to 20 employees and 5,625 options were canceled. The 1995 options expire on March 10, 2000 and are exercisable as to forty percent (40%) of the optioned shares after one (1) year, sixty percent (60%) after two years, eighty percent (80%) after three years and one hundred percent (100%) after four (4) years. During 1994 no options were issued and 6,250 options were canceled. During 1993, options to purchase 13,750 shares of common stock at a price of $14.00 per share were issued to 6 employees and 25,000 options were canceled. Stock options expire between July 17, 1996 and March 10, 2000. (ii) Private Placement Warrants In connection with the Company's private placement (see section above titled Private Offering) warrants to purchase 420,000 shares of the Company's common stock at $2.00 per share were sold to a group of private investors and senior management. The warrants expire between May 9, 1998 and June 29, 2000. (iii) Other warrants - During 1994, 60,600 Class D Warrants and 16,537 Underwriter's Warrants were exercised, with 22,958 shares of common stock and 16,537 Class E Warrants being issued. The exercise of these warrants raised $165,000 of capital for the Company. Both the Class D Warrants and the Class E Warrants have expired. In September 1994, the Company issued warrants to purchase 6,250 shares of the Company's common stock at $5.25 per share to the Ontario Development Corporation in connection with their increase in the export financing facility available to the Company's Canadian subsidiary, from Cdn. $500,000 to Cdn. $1,000,000) See Note 5 for additional information. On December 31, 1991, the Board of Directors adopted the 1991 Directors Warrant Plan ("Plan"). Pursuant to the Plan, each non- employee director will be sold a five-year warrant to purchase 15,000 shares of Common Stock at an exercise price to be determined by the Board at the time of such sale, but shall not be less than the current market price for such shares at the time of issuance of the warrant. During 1994, options to purchase 3,750 shares were issued to a Director at $9.64 per share, subject to adjustment. None were sold in 1995. On April 7, 1995, the Company issued warrants to purchase 6,250 shares of the Company's common stock at $4.00 per share to Barringer Laboratories in connection with their extending an intercompany obligation, which has subsequently been paid. The other warrants expire between April 1, 1996 and January 12, 1999. Increase in Authorized Shares At the reconvened 1995 Annual Meeting of Stockholders, the Company's stockholders approved an amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of capital stock of the Company from 7,000,000 to 12,000,000, comprised of 7,000,000 shares of Common Stock, 1,000,000 shares of Convertible Preferred Stock, par value $1.25 per share and 4,000,000 shares of Preferred Stock, par value $2.00 per share. 8. Income Taxes Effective January 1, 1993 the Company prospectively adopted Financial Accounting Standards No 109 "Accounting for Income Taxes". The adoption had no effect on prior year financial statements presented. Accordingly, there was no cumulative effect adjustment required in the year ended December 31, 1993. The provision for income taxes (benefits) charged to continuing operations are as follows: 1995 1994 1993 Current Tax Expense (Benefit): U.S. - - - Canadian - - $147,000 Total Current - - 147,000 _____________________________ Deferred Tax Expense (Benefit): Canadian - $75,000 (300,000) _____________________________ Total Deferred - 75,000 (300,000) _____________________________ Total income tax provision (benefit) $ 0 $75,000 $(153,000) ============================= Deferred tax assets are comprised of the following temporary differences and carryforwards at December 31: 1995 1994 Nondeductible allowances against trade $ 15,000 $206,000 receivables Nondeductible inventory reserves 90,000 133,000 Nondeductible expense accruals 50,000 52,000 Depreciation 50,000 82,000 Other 10,000 10,000 Tax benefit of U.S. operating 6,870,000 6,552,000 loss carry forwards Tax benefit of Canadian operating loss and investment credit carry forwards 790,000 850,000 _________________________ Gross deferred tax assets 7,875,000 7,885,000 Deferred tax assets valuation allowance (7,650,000) (7,660,000) _________________________ Net deferred tax asset $ 225,000 $ 225,000 asset ========================== As a result of the Company's history of losses, a valuation allowance has been provided for all U.S. deferred tax assets and for substantially all of the Canadian deferred tax assets. The net deferred tax asset relates to the Company's Canadian subsidiary, which has available tax credits and loss carryforwards. The Canadian subsidiary has a history of profitability, despite the consolidated losses of the Company. Based on this history and estimated 1996 earnings, which includes earnings from certain contracts, as well as available tax planning strategies, management considers realization of the unreserved deferred tax asset more likely than not. During 1995 the Canadian subsidiary realized tax loss carryforwards of approximately $75,000 with a tax benefit of approximately $29,000. The Company's income tax provision (benefit) differed from the amount of income tax determined by applying the applicable statutory U.S. federal income tax rate to pretax income from continuing operations as a result of the following: 1995 1994 1993 Income taxes (benefit) computed $ (280,000) $ (821,000) $155,000 at the U.S. statutory rate U.S. losses for which no tax 398,000 943,000 315,000 benefit has been recognized Consolidated subsidiaries outside the U.S.: Change in deferred tax asset (89,000) 75,000 (300,000) valuation allowance Use of Canadian tax credits and netoperating loss carry forwards to offset Canadian income net of effect of U.S./ Canada tax rate differential Provision (benefit) for income taxes (29,000) (122,000) (323,000) ____________________________________ $ 0 $ 75,000 $ (153,000) ==================================== At December 31, 1995, the Company has net operating loss carry forwards of approximately $13,152,000 for federal income tax purposes which expire in varying amounts through 2011. The Company also has Canadian net operating loss carryforwards of approximately $2,190,000 and research and development investment tax credits of approximately $730,000 which expire in varying amounts through 2005. 9. Commitments The Company rents facilities, automobiles and equipment under various operating leases. Rental expenses under such leases amounted to $280,000, $191,000 and $108,000 for 1995, 1994 and 1993, respectively. At December 31, 1995, the aggregate minimum commitments pursuant to operating leases are as follows: Year ending December 31, 1996 $275,000 1997 269,000 1998 160,000 1999 121,000 2000 and thereafter 545,000 10. Pension Plan The Company's Canadian subsidiary's defined benefit pension plan, which covered its Canadian employees, was terminated at December 31, 1993. At the same time, it established a money purchase plan that is structured after the 401(k) salary deferral plan available to all U.S. employees and as such, does not establish any corporate obligation other than a discretionary matching formula to employee contributions. As a result of the termination, the Company recognized a gain of $214,000, representing the excess of the Plan's projected benefit obligation over the accumulated benefit obligation, in 1993 and recognized an additional gain in 1995 of $172,000, representing the excess of the Plan's assets over the cost of providing the annuities to the participants for the value of their termination benefits. This excess will be put into a money purchase contract and used by the Company to provide for its matching contributions under the new arrangement. This amount is being carried as a deferred pension expense asset on the balance sheet. The Company maintains a 401(k) salary deferral plan instituted for all U.S. employees with more than one year of service. As a money purchase plan, it does not establish any Company liability other than a matching formula to employee contributions. The aggregate cost of the plan for 1995, 1994 and 1993 was $15,700 , $16,000 and $14,000. 11. Supplemental Disclosures of Cash Flow Information The Company made cash payments for interest of $180,000, $246,000 and $189,000 for the three years ended December 31, 1995. Additionally, income taxes of $123,000, $3,500 and none were paid for the three years ended December 31, 1995, respectively. In the three years ended December 31, 1995, the Company issued Preferred Stock dividends in the amount $114,000, $108,000 and $82,000 in the form of 11,338, 25,291 and 137,485 shares of common stock, respectively. 12. Information Concerning the Company's Principal Activities A summary of the Company's continuing operations by geographic area for the years ended December 31, is as follows: 1995 1994 1993 Total sales of goods and services: United States $1,867,000 $ 1,862,000 $4,061,000 Canada 5,110,000 5,593,000 6,185,000 Europe 1,599,000 - - Eliminations (2,202,000) (1,941,000) (2,476,000) ____________________________________ Totals $ 6,374,000 $ 5,514,000 $7,770,000 ===================================== Income (loss) from continuing operations: United States $(1,548,000) $(2,653,000) $ (902,000) Canada 270,000 20,000 1,495,000 Europe 100,000 - - ____________________________________ $(1,178,000) $(2,633,000) $ 593,000 ===================================== Identifiable assets: United States $ 4,253,000 $6,400,000 $8,982,000 Canada 6,248,000 4,422,000 3,890,000 Europe 696,000 - - Eliminations (6,462,000) (4,030,000) (3,933,000) _____________________________________ Totals $ 4,735,000 $6,792,000 $8,939,000 ====================================== Export sales, including sales from Canada to other countries, comprised 73.6% of total revenues and were made primarily to Western Europe, Asia and Central and South America. A summary of the Company's continuing operations by principal activity for the three years ended December 31, 1995 is as follows (in $000's): Total Elimination Res & Dev Instruments Corp & other 1995: Sales of goods $ 6,374 $ 1,052 $ 5,250 $ 72 ======= ================================== Operating income (loss) $ (886) $ (311) $ 268 $ (843) ================================== Interest expense and other (292) ________ Loss before income taxes $ (1,178) ========= Depreciation and amortization $ 362 $ 45 $ 314 $ 3 ======== ================================== Capital expenditures $ 359 $ 10 $ 349 - ======== ================================== Identifiable assets $ 4,735 $(6,462) $ 275 $ 7,589 $ 3,333 ======================================================
Total Elimination Res & Dev Instruments Corp & other 1994: Sales of goods $ 5,514 $ 298 $ 5,216 - ======== ================================= Operating income (loss) $ (2,469) $ (208) $ (1,075) $(1,186) ================================= Interest expense and other (89) _________ Loss before income taxes $ (2,558) ========= Depreciation and amortization $ 320 $ 8 $ 280 $ 32 ======== ================================= Capital expenditures $ (491) - $ (491) - ========= Identifiable assets $ 5,003) $(4,030) $ 302 $ 5,486 $ 3,245 ============================================== 46Identifiable assets - held for sale $ 1,789 ________ Identifiable assets - per balance sheet $ 6,792 ========
Total Elimination Res & Dev Instruments Corp & other 1993: Sales of goods $7,770 $ 1,009 $ 6,761 - ====== =================================== Operating income (loss) $ 541 $ (56) $ 1,709 $ (1,112) =================================== Interest expense and other (101) _______ Income before income taxes $ 440 ====== Depreciation and amortization $ 214 $ 20 $ 162 $ 32 ====== =================================== Capital expenditures $ 120 - $ 116 $ 4 ====== =================================== Identifiable assets - $7,144 $(3,933 $ 325 $ 6,363 $ 4,389 ) continuing operations =============================================== Identifiable assets - held for sale 1,795 _____ Identifiable assets - per $8,939 balance sheet ======
13. Fourth Quarter Adjustments During the fourth quarter of 1995, the Company recorded adjustments for estimated losses on inventories and receivables of approximately $450,000 and $200,000, respectively. During the fourth quarter of 1994, the Company recorded adjustments for estimated losses on inventories and receivables of approximately $800,000 and $515,000 respectively, and approximately $665,000 to reverse certain sales recorded in prior quarters. VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, SCHEDULE II (IN $000'S) Balance Balance begin end period Addition Deduction Recovery period Allowance for doubtful accounts and sales allowances: 1995: 539 221 719 41 1994: Continuing operations 25 526 17 5 539 1993: Continuing operations 40 5 20 25 EXHIBIT NO. DESCRIPTION PAGE NO. 31A The Company's Certificate of Incorporation, as amended 21 Subsidiaries of Barringer Technologies, Inc. 23.1 Consent of Independent Certified Public Accountants 23.2 Consent of Independent Certified Public Accountants 27 Financial Data Schedule EX-3 2 EXHIBIT 3.1A CERTIFICATE OF INCORPORATION OF BARRINGER RESEARCH INC. THE UNDERSIGNED, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY as follows: FIRST: The name of the corporation is BARRINGER RESEARCH INC. (hereinafter called the "Corporation"). SECOND: Its registered office in the State of Delaware is located at No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name and address of its registered agent is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington, Delaware 19899. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares of stock that the Corporation shall have authority to issue is two million (2,000,000) shares of Common Stock, of the par value of $.01 per share. FIFTH: The name and mailing address of the incorporator is Denis Pinkernell, 277 Park Avenue, New York, New York 10017. SIXTH: The names and mailing addresses of the persons who are to serve as directors of the Corporation until the first annual meeting of stockholders or until their successors are elected and qualify are as follows: Dr. Anthony R. Barringer 304 Carlingview Drive Rexdale, Ontario, Canada Dr. D. Richard Clews 304 Carlingview Drive Rexdale, Ontario, Canada Mr. Robert J. Armstrong 366 Bay Street Toronto 1, Ontario, Canada SEVENTH: Subject to the provisions of the General Corporation Law of the State of Delaware, the number of directors of the Corporation shall be determined as provided in the By-laws. EIGHTH: All corporate powers of the Corporation shall be exercised by the Board of Directors. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized: 1. To make, alter or repeal the By-laws of the Corporation. 2. By a suitable By-law or by a resolution passed by a majority of the entire Board of Directors to designate two or more of their number to constitute a committee or committees with such name or names as may be determined from time to time by resolution of the Board of Directors, which committee or committees, to the extent provided in such resolution or resolutions or in the By-laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. 3. To fix and determine and vary from time to time the amount of working capital and reserve funds of the Corporation; to determine whether any and if any, what part of the net profits of the Corporation or of its surplus or of its net assets in excess of its capital shall be declared in dividends and paid to the stockholders, and to direct and determine the use and disposition of any such net profits or of any such surplus or of any such net assets in excess of capital. 4. To remove at any time, for cause or without cause, any officer or employee of the Corporation, or to confer such power on any committee or officer; provided, however, that any officer elected or appointed by the Board of Directors may be removed only by the affirmative vote of a majority of the Board of Directors then in office. 5. Subject to the provisions of the statutes of Delaware, to exercise any and all other powers, in addition to the powers expressly conferred by law and by this Certificate of Incorporation which may be conferred upon it by the Corporation through appropriate by-law provisions. NINTH: The Board of Directors may from time to time offer for subscription, or otherwise issue or sell, or grant rights, warrants, or options for the subscription to or purchase of, any and all of the authorized stock of the Corporation not then issued or which may have been issued and reacquired as treasury stock by the Corporation, and any or all of any increased stock of any class that may hereafter by authorized, for such consideration as the directors may determine. The Board of Directors may, at the time of such issue and sale, or at the time of granting of such rights, warrants or options, specify in amount or value the part of the consideration received on such issue and sale over and above the par value of such stock, which shall be capital and which shall be surplus, respectively. Bonds, debentures, certificates of indebtedness or other securities may be issued, sold or disposed of pursuant to resolution of the Board of Directors for such consideration and upon such terms and conditions as may be deemed advisable by the Board of Directors in the exercise of its discretion. TENTH: Each director and each officer of the Corporation shall be indemnified by the Corporation to the full extent permitted under the General Corporation Law of the State of Delaware. THE UNDERSIGNED, being the incorporator hereinbefore named for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, DOES MAKE this Certificate, hereby declaring and certifying that the facts herein stated are true and, accordingly, has hereunto set his hand this 6th day of September, 1967. _______________________________ Denis Pinkernell STATE OF NEW YORK: ss.: COUNTY OF NEW YORK : BE IT REMEMBERED, that on this ______ day of ___________, 1967, personally came before me, _______________, a Notary Public for the State of New York, DENIS PINKERNELL, the party to the foregoing Certificate of Incorporation, known to me personally to be such, and acknowledged said Certificate to be the act and deed of the signer and that the facts therein stated are truly set forth. GIVEN under my hand and seal of office the day and year aforesaid. _________________________________ Notary Public CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESEARCH INC. (Pursuant to 242 of the General Corporation Law) THE UNDERSIGNED, D. RICHARD CLEWS and ROBERT J. ARMSTRONG, being the duly elected Executive Vice President and Secretary, respectively, of BARRINGER RESEARCH INC., a Delaware corporation (the "Corporation"), for the purpose of amending the Certificate of Incorporation of the Corporation pursuant to 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESEARCH INC. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on September 7, 1967. SECOND: The Board of Directors of the Corporation, at a meeting thereof duly called and held on March 12, 1980, duly adopted and approved and declared advisable the following resolution with respect to the amendment of Article FOURTH of the Certificate of Incorporation of the Corporation to increase the authorized capitalization to ten million shares of Common Stock, par value $.01 per share, in accordance with the provisions of 242 of the General Corporation Law: RESOLVED that, subject to the approval of stockholders of the Corporation at the Annual Meeting thereof to be held on May 14, 1980, Article FOURTH of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety as follows: "FOURTH: The total number of shares of stock that the Corporation shall have authority to issue is ten million (10,000,000) shares of Common Stock of the par value of $.01 per share. THIRD: At the annual meeting of stockholders of the Corporation duly called and held on May 14, 1980, in accordance with 242 of the General Corporation Law of the State of Delaware the holders of a majority of the outstanding Common Stock of the Company voted in favor of the Amendment of the Certificate of Incorporation as herein set forth in accordance with the provisions of 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 14th day of May, 1980. _______________________________ D. Richard Clews Executive Vice President ATTEST: _______________________________ Robert J. Armstrong Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESEARCH INC. (Pursuant to 242 of the General Corporation Law) THE UNDERSIGNED, D. RICHARD CLEWS and ROBERT J. ARMSTRONG, being the duly elected Executive Vice President and Secretary, respectively, of BARRINGER RESEARCH INC., a Delaware corporation (the "Corporation"), for the purpose of amending the Certificate of Incorporation of the Corporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESEARCH INC. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on September 7, 1967. SECOND: The Board of Directors of the Corporation, at a meeting thereof duly called and held on May 22, 1980, duly adopted and approved and declared advisable the following resolution with respect to the amendment of Article FIRST of the Certificate of Incorporation of the Corporation to change the name of the corporation in accordance with the provisions of Section 242 of the General Corporation Law: RESOLVED that, subject to approval of stockholders of the Corporation, Article FIRST of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety to read as follows: "FIRST: The name of the Corporation is BARRINGER RESOURCES INC. (hereinafter called the "Corporation")." THIRD: The holders of a majority of the outstanding shares of Common Stock ($.01 par value) of the Corporation, the only outstanding class of stock of the Corporation, by written consent pursuant to Section 228 of the General Corporation Law of the State of Delaware, consented to the amendment of the Certificate of Incorporation as herein set forth in accordance with the provisions of Section 242 of the General Corporation Law ofthe State of Delaware. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 30th day of May, 1980. ________________________________ D. Richard Clews Executive Vice President ATTEST: ________________________________ Robert J. Armstrong Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. (Pursuant to Section 242 of the General Corporation Law) THE UNDERSIGNED, D. RICHARD CLEWS and ROBERT J. ARMSTRONG, being the duly elected and acting Executive Vice President and Secretary, respectively, of BARRINGER RESOURCES INC., a Delaware corporation (the "Corporation"), for the purpose of amending the Certificate of Incorporation of the Corporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESOURCES INC. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 7, 1967, under the name of BARRINGER RESEARCH INC. SECOND: The Board of Directors of the Corporation at a meeting thereof called and held on April 30, 1981, duly adopted and approved and declared advisable the following resolution with respect to the amendment of the Certificate of Incorporation by the addition of Articles ELEVENTH and TWELFTH thereto relating to higher voting requirements required with respect to certain transactions in accordance with the provisions of Section 242 of the General Corporation Law: RESOLVED, that subject to the approval of the stockholders of the Corporation, the Certificate of Incorporation of the Corporation be amended to add Articles ELEVENTH and TWELFTH to the Certificate of Incorporation of the Corporation to read and provide in their entirety as follows: "ELEVENTH: The affirmative vote of the holders of at least eighty percent (80%) of the outstanding shares of Common Stock entitled to vote thereon shall be required to authorize, adopt or approve any of the following: (i) any plan of merger or consolidation of the Corporation with or into any other corporation holding more than ten percent (10%) of the Corporation's voting stock (such corporation hereinafter referred to as a "Related Company") or any affiliate of a Related Company; or (ii) any sale, lease or exchange or other disposition of all or substantially all of the assets of the Corporation to any Related Company or any affiliate of a Related Company." "TWELFTH: Article ELEVENTH and this Article TWELFTH may not be amended, except by the affirmative vote of the holders of at least eighty percent (80%) of the outstanding shares of Common Stock of the Corporation entitled to vote thereon." THIRD: The foregoing amendment to the Certificate of Incorporation of the Corporation was approved by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock ($.01 par value) of the Corporation, the only outstanding class of stock of the Corporation, at the Annual Meeting of the Corporation held June 10, 1981 in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 10th day of June, 1981. ___________________________ D. Richard Clews Executive Vice President ATTEST: ___________________________ Robert J. Armstrong Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. (Pursuant to 242 of the General Corporation Law) THE UNDERSIGNED, ANTHONY R. BARRINGER and ROBERT J. ARMSTRONG, being the duly elected President and Secretary, respectively, of BARRINGER RESOURCES INC., a Delaware corporation (the "Corporation"), for the purposes of amending the Certificate of Incorporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESOURCES INC. The original Certificate of Incorporation was filed with the Secretary of State of Delaware on September 7, 1967, under the name of BARRINGER RESEARCH INC. SECOND: The Board of Directors of the Corporation at a meeting thereof duly called and held on January 21, 1983, duly adopted and approved and declared advisable the following resolution with respect to the amendment of Article FOURTH of the Certificate of Incorporation of the Corporation to increase the authorized capitalization to 10,100,000 shares comprised of 10,000,000 shares of Common Stock, par value $.01 per share, and 100,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"), in accordance with the provisions of Section 242 of the General Corporation Law: RESOLVED, that subject to the approval of the Stockholders of the Corporation at the Annual Meeting thereof to be held on May 11, 1983, Article FOURTH of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety as follows: FOURTH: Section 1. Authorized Shares The total number of shares of stock the Corporation shall have authority to issue is ten million one hundred thousand (10,100,000) shares comprised of 10,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), and 100,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"). Section 2. Rights of the Classes The shares of Common Stock and Class B Common Stock shall be identical in every respect and shall be entitled to all of the rights and privileges pertaining to common stock without limitations, prohibitions, restrictions or qualifications, except as otherwise expressly set forth in this Article. Section 3. Voting Powers The holders of Common Stock shall be entitled to one (1) vote per share on all matters on which holders of common stock are entitled to vote. The holders of Class B common stock shall be entitled to one hundred (100) votes per share on all matters on which holders of common stock of the Corporation are entitled to vote. The holders of Common Stock and Class B Common Stock shall vote as a single class on all matters, except as otherwise required by law. No holder of Common Stock or Class B Common Stock shall have any preemptive or preferential rights of subscription to any shares of any class of stock in this Corporation, whether now or hereafter authorized. Section 4. Conversion of Class B Common Stock into Common Stock Any holder of Class B Common Stock may, at any time and from time to time, by written notice to the Secretary of the Corporation, convert said shares into a like number of shares of Common Stock. Section 5. Restrictions on the Right to Transfer or Hypothecate Class B Common Stock No holder of Class B Common Stock shall have the right or power to sell, transfer, assign, pledge, hypothecate, or otherwise dispose of any share of Class B Common Stock, provided, however, that in the event the Board of Directors of the Corporation, at a meeting thereof duly called and held or by unanimous written consent, shall consent to a sale, transfer, assignment, pledge, hypothecation or other disposition, upon the recording thereof in the minutes of such meeting or the filing of a copy of such written consent with the Secretary of the Corporation, such sale, transfer, assignment, pledge, hypothecation or other disposition of shares of Class B Common Stock may be effected in accordance with the terms of such consent, and such shares of Class B Common Stock shall remain outstanding. In the event that any holder of Class B Common Stock shall sell, assign, transfer, pledge, hypothecate or otherwise dispose of any share of Class B Common Stock without such consent, such shares shall automatically and immediately upon the occurrence of such event be converted into, and shall be, an equal number of shares of Common Stock. THIRD: At the Annual Meeting of Stockholders of the Corporation duly called and held on May 11, 1983, in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware the holders of the majority of the outstanding Common Stock of the Corporation, the only outstanding class of stock of the Corporation, voted in favor of the amendment of the Certificate of Incorporation as set forth herein. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 11th day of May, 1983. __________________________________ Anthony R. Barringer President Attest: __________________________________ Robert J. Armstrong Secretary CERTIFICATE FOR RENEWAL AND REVIVAL OF CHARTER Barringer Resources Inc, a corporation organized under the laws of Delaware, the certificate of incorporation of which was filed in the office of the Secretary of State on the 7th day of September 1967, and recorded in the office of the Recorder of Deeds for ____________ County, the charter of which was voided for non-payment of taxes, now desires to procure a re storation, renewal and revival of its charter, and hereby certifies as fo llows: 1. The name of this corporation is Barringer Resources Inc. 2. Its registered office in the State of Delaware is located at Corporation Trust Center, 1209 Orange Street, City of Wilmington, Zip Code 19801 County of New Castle the name and address of the registered agent is The Corporation Trust Company. 3. The date when the restoration, renewal, and revival of the ch arter of this company is to commence is the 28th day of February, name be ing prior to the date of the expiration of the charter. This renewal and revival of the charter of this corporation is to be perpetual. 4. This corporation were duly organized and carried on the busin ess authorized by its charter until the 1st day of March A.D. 1986, at wh ich time its charter became inoperative and void for non-payment of taxes and this certificate for renewal and revival if filed by authority of th e duly elected directors of the corporation in accordance with the laws o f the State of Delaware. IN TESTIMONY WHEREOF, and in compliance with the provisions of Se ction 312 of the General Corporation Law of the State of Delaware, as ame nded, providing for the renewal, estimates and restoration of charters, A .R. Barringer the last and acting President, and R.J. Armstrong, the last and acting Secretary of Barringer Resources Inc., have hereunto set thei r hands to this certificate this 30th day of July 1986. _______________________________ Last and Acting President __________________________________ Attest: Last and Acting S ecretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. (Pursuant to Section 242 of the General Corporation Law) THE UNDERSIGNED, ANTHONY R. BARRINGER and DENIS R. PINKERNELL, being the duly elected President and Assistant Secretary, respectively, of BARRINGER RESOURCES INC., a Delaware corporation (the "Corporation"), for the purposes of amending the Certificate of Incorporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESOURCES INC. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 7, 1967, under the name of BARRINGER RESEARCH INC. SECOND: The Board of Directors of the Corporation at a meeting thereof duly called and held on January 20, 1988, duly adopted and approved and declared advisable the following resolution with respect to the amendment of Article FOURTH of the Certificate of Incorporation of the Corporation to increase the authorized capitalization to 11,100,000 shares comprised of 10,000,000 shares of Common Stock, par value $.01 per share, and 100,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"), and 1,000,000 shares of Preferred Stock, per value $1.25 per share, in accordance with the provisions of Section 242 of the General Corporation Law: RESOLVED, that subject to the approval of the Stockholders of the Corporation, Article FOURTH of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety as follows: FOURTH: Section 1. Authorized Shares. The total number of shares of stock the Corporation shall have authority to issue is eleven million one hundred thousand (11,100,000) shares comprised of 10,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), and 100,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock") and 1,000,000 of Preferred Stock, par value $l.25 per share ("Preferred Stock"). Section 2. Preferred Stock The designations, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Preferred Stock are as follows: A. Dividends. The holders of the Preferred Stock shall be entitled to receive or have set apart for payment dividends thereon at the rate of $.10 per share per annum, and no more, payable semi-annually for the last preceding dividend period on the last days of June and December in each year in shares of Common Stock valued for such purpose-at the average closing price of the Common Stock in the over-the-counter market over the 20 trading days immediately prior to the record date for each semi-annual payment as quoted by NASDAQ in the over- the-counter market (or organized exchange). No dividend shall be paid or set apart for payment on the Common Stock or Class B Common Stock of the Corporation or any other class of stock or series thereof ranking junior to the Preferred Stock, unless and until dividends at the rate of $.10 per share per annum on the Preferred Stock shall have been paid or set apart for payment in full. B. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation under any circumstances or any voluntary liquidation or winding up of the Corporation, which shall be deemed to have occurred upon the sale of all or substantially all of its assets, the holders of Preferred Stock will be entitled to receive, prior to and in preference to any distribution of the assets or surplus funds of the Corporation to the holder of any other shares of Capital Stock by reason of the ownership thereof, an amount equal to $1.25 per share and no more (the "Preferential Amount"). If, upon the occurrence of such an event, the assets and funds thus distributed among the holders of Preferred Stock shall be insufficient to permit the payment to such holder of the full Preferential Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Preferred Stock. After the payment or setting apart of the full Preferential Amount required to be paid to the holders of the Preferred Stock, the holders of Capital Stock ranking in liquidation junior to the Preferred Stock shall be entitled to receive all remaining assets or surplus funds of the Corporation. C. Consents of Preferred Stock. Without the affirmative vote or written consent of the holders of a majority of the shares of Preferred Stock at the time outstanding, the Corporation shall not: (a) agree to be acquired, directly or indirectly, by another entity by means of merger, consolidation or otherwise, resulting in the exchange of outstanding shares of Capital Stock for securities or other consideration issued or paid by the acquiring corporation or its subsidiaries, or sell all, or substantially all, of its assets; or (b) alter, change or amend the preferences, rights or privileges of holders of the Preferred Stock contained herein or in the Certificate of Incorporation or By-Laws of the Corporation or elsewhere as in effect on the date that this Certificate of Amendment is filed with the Secretary of the State of Delaware; or (c) alter, change or amend the Certificate of Incorporation or the By-Laws of the Corporation or otherwise to provide for the authorization and issuance of any additional class or series of Capital Stock, including additional shares of Preferred Stock having any rights, preferences or priorities equivalent to or greater than (either in any particular aspect or in the aggregate) the Preferred Stock; or (d) agree to a voluntary liquidation, dissolution, or winding up of the Corporation; or (e) adopt and/or implement any stock option or similar employee stock bonus or incentive plan, except the Permitted Stock Plans. D. Voting Rights. In addition to the voting rights granted to the holders of the Preferred Stock by the laws of the State of Delaware and by Section C hereof, each holder of Preferred Stock shall be entitled at each meeting of the stockholders of the Corporation to that number of votes which is equal to the number of shares of Common Stock into which each share of Preferred Stock is convertible on the record date with respect to such meeting for each share of such stock standing in his name on the books of the Corporation. E. Conversion. (a) Conversion by Holder. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time prior to the fourth anniversary of the date of issuance thereof, into fully paid and nonassessable shares of Common Stock, in accordance with the Conversion Formula (as defined below). Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall (i) surrender the certificate(s) therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, or (ii) notify the Corporation or any transfer agent that such certificates have been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the number of shares of Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder(s) of Preferred Stock a certificate(s) for the number of shares of Common Stock to which the holder shall be entitled. Such conversion shall be deemed to have been made immediately prior to the closing of business on the date of such surrender of the shares of Preferred Stock to be converted or delivery of the aforementioned indemnification agreement, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (b) Conversion by the Corporation. The Corporation may require the conversion of all (but not less than all) of the Preferred Stock in accordance with the Conversion Formula (as defined below) (i) at any time after the fourth anniversary of the date of issuance of such Preferred Stock, or (ii) immediately upon a consolidation, merger or sale of substantially all of the assets of the Corporation under circumstances where the Corporation is not the surviving entity, or (iii) upon the repurchase by the Corporation of all of its then outstanding Class A Warrants or all of its Class B Warrants issued by the Corporation in connection with the sale of Units under a certain Purchase Agreement dated May 10, 1988 between the Corporation and Purchasers named therein. Upon the occurrence of such an event specified in this Section E, and upon the election of the Corporation to require the conversion of all of the Preferred Stock, the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent. The Corporation, however, shall give prompt written notice of such conversion to each holder of Preferred Stock at his last address listed in the Corporation records. The Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing shares of the Preferred Stock being converted are either delivered to the Corporation or any transfer agent, as hereinafter provided, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith. Thereupon, there shall be issued and delivered to such holder, promptly at such office in the holder's name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of the Preferred Stock surrendered were convertible on the date on which such conversion occurred. (c) Conversion Price and Conversion Formula. The Purchase Price per share (the "Purchase Price Per Share") shall be $l.25 and the initial Conversion Price per share for Preferred Stock (the "Conversion Price") shall be $l.25, subject to adjustment from time to time as provided herein. Each share of the Preferred Stock shall be convertible into that number of shares of Common Stock that results from dividing the Purchase Price Per Share by the Conversion Price in effect at the time of conversion (the "Conversion Formula"). (d) Adjustment of Conversion Price for Stock Splits and Combinations. If the Corporation shall at any time, or from time to time, after the date of the issuance of the Preferred Stock, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased, and conversely, if the Corporation shall at any time or from time to time after the original issue date of the Preferred Stock combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this subsection (d) shall become effective at the close of business on the date the subdivision or combination becomes effective. (e) Adjustment of Conversion Price for Certain Dividends and Distributions. If the Corporation at any time, or from time to time, after the date of the issuance of the Preferred Stock, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then, and in each such event, the Conversion Price then in effect shall be decreased as of the date of such issuance or, at the time or upon the event such a record date shall have been fixed, as of the close of business on such record date (the "Record Date"), by multiplying the Conversion Price then in effect by a fraction, determined as follows: (i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date; and (ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such Record Date shall have been fixed ana such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the closing of the business on such Record Date, and thereafter the Conversion Price for such Preferred Stock shall be adjusted pursuant to this section (e) as of the time of each action, or payment of such dividends or distributions. (f) Adjustment for Reclassification, Exchange or Substitution. If the Common Stock issuable upon the conversion of the Preferred Stock shall be changed into the same or a different number of shares of a different class or classes of stock, or other securities or property, whether by reclassification, exchange, substitution or other transaction having similar effect (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for elsewhere in this Section E) then and in each such event the holder of each share of Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reclassification, exchange, substitution or other transaction having similar effect, as did or shall the holders of shares of Common Stock, as if such shares of Preferred Stock had been converted into Common Stock immediately prior to the Record Date with respect to such reclassification, exchange or substitution, all subject to further adjustment as provided herein. (g) Reorganization, Mergers, Consolidations, or Sales of Assets. If at any time, or from time to time, there shall be (other than a subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section E) a capital reorganization involving a merger or consolidation of the Corporation with or into another corporation, or the sale or transfer of all or substantially all of the Corporation's properties and assets to any other person (a "sale"), then, as a part of such reorganization, merger, consolidation or sale, due and adequate provision shall be made so that the holders of the Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock, the number of shares or other securities or property of the Corporation, or of the successor corporation resulting from such merger reorganization, consolidation or sale, as to which a holder of Common Stock deliverable upon conversion would have been entitled to receive as a result of such reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in respect to the rights of the holders of the Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section E (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (h) Sale of Shares Below Conversion Price. If at any time, or from time to time, after the date of issuance of the Preferred Stock and while any shares of the Preferred Stock are outstanding, the Corporation shall issue or sell Additional Shares of Common Stock (as hereinafter defined) or options, warrants, convertible securities or other rights to acquire Common Stock other than as (i) a dividend or other distribution on any class of stock permitted by (e), (ii) a subdivision or combination of shares of Common Stock as provided for in (d) hereof, or (iii) a reclassification, exchange, substitution or other transaction having similar effect as provided for in (f) hereof, for a consideration per share less than the Conversion Price in effect immediately prior to the event, or without consideration, then, and thereafter successively upon each such issuance, the Conversion Price in effect immediately prior to the issuance of such shares shall forthwith be reduced to a price (calculated to the nearest full cent) determined by dividing (a) an amount equal to (i) the total number of shares of Common Stock outstanding immediately prior to such issuance multiplied by the Conversion Price in effect immediately prior to such issuance, plus (ii) the consideration, if any, received by the Company upon such issuance by (b) the total number of shares of Common Stock outstanding immediately after such issuance provided, however, that no adjustment otherwise required hereunder, shall be made unless the reduction in Conversion Price required by this Section, together with all prior reductions which have not resulted in an adjustment to the Conversion Price, shall result in a reduction of the Conversion Price by at least $0.05 per share. For purposes of this (h), the price received by the Corporation for such Additional Shares of Common Stock shall be computed as follows: (x) Cash and Property. If such consideration consists of: (a) cash, the consideration shall be aggregate amount of cash received by the Corporation; (b) property (including intellectual property) other than cash, the consideration shall be the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (c) part of cash or part property and/or stock or other securities of the Corporation or both, the consideration shall be the amount equal to the sum of cash and fair market value of the property actually received by the Corporation computed consistently with the prior paragraphs herein and determined in good faith by the Board. (y) Options. Shares of the Corporation called for pursuant to options and warrants which are held as of the date of a conversion of Preferred Stock by option or warrant holders, and which are not exercised, and have not terminated or lapsed, at the time of such conversion, will be deemed to have been issued, for purposes of the definitions and calculations hereof, at a price per share determined by dividing: (a) the total amount, if any, received and receivable by the Corporation as consideration for the issuance of such options or warrants, plus the minimum aggregate amount of additional consideration (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such options or warrants, by (b) the maximum number of such shares (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such options or warrants. (i) Definitions. The terms "Additional Shares of Common Stock" as used herein shall mean all shares of Common Stock issued or deemed issued by the Corporation after the issuance date of the Preferred Stock, whether or not subsequently reacquired or retired by the Corporation, other than shares of Common Stock issued (i) upon conversion of the Preferred Stock, (ii) upon conversion of $696,000 principal amount of the Corporation's 12 1/2% Convertible Subordinated Debentures due in 1996, or any options or warrants or (iii) upon exercise of options granted to purchase up to 1,197,500 shares of Common Stock of the Corporation under its stock option plans. (j) Accountants' Certificate of Adjustment. In each case of an adjustment of readjustment of the Conversion Price for the number of shares of Common Stock or other securities issuable upon conversion of the Preferred Stock, the Corporation, at its expense, shall cause independent certified public accountants of recognized standing selected by the Corporation (who may be the independent certified Public accountants then auditing the books of the Corporation) to compute such adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder or Preferred Stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or to be received by the Corporation for any Additional Shares of Common Stock issued or sold, (ii) the Conversion Price both before and after such adjustment or readjustment, and (iii) the number of Additional Shares of Common Stock and the type and amount, if any, of other property which at the time would be received upon conversion of the Preferred Stock. (k) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay, in cash, an amount equal to the product of (i) such fraction of a share, multiplied by (ii) the fair market value of one share of the Corporation's Common Stock on the date of conversion, as determined in good faith by the Board. (1) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock, and if at any time the number of authorized but unissued, shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of Preferred Stock, the Corporation will, subject to the requirements of applicable state law, take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as shall be sufficient for such purposes. F. Nonassessable Status of Stock. All the share of Preferred Stock for which the full consideration determined by the Board of Directors (which shall be not less than the par value of such shares) has been paid or delivered, in cash or property in accordance with the resolutions of the Board of Directors authorizing the issuance of such shares, shall be deemed fully paid-stock and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon. Section 3. Rights of the Classes of Common Stock. The shares of common Stock and Class B Common Stock shall be identical in every respect and shall be entitled to all of the rights and privileges pertaining to common stock without limitations, prohibitions, restrictions or qualifications, except as otherwise expressly set forth in this Article Fourth. Section 4. Voting Powers. The holders of Common Stock shall be entitled to one (1) vote per share on all matters on which holders of common stock are entitled to vote. The holders of Class B Common Stock shall be entitled to one hundred (100) votes per share on all matters on which holders of common stock of the Corporation are entitled to vote. The holders of Common Stock, Class B Common Stock and the Preferred Stock shall vote as a single class on all matters, except as otherwise required herein or by law. No holder of Common Stock or Class B Common Stock shall have preemptive or preferential rights of subscription to any shares of any class of stock in this Corporation, whether nor or hereafter authorized. Section 5. Conversion of Class B Common Stock into Common Stock. Any holder of Class B Common Stock may, at any time and from time to time, by written notice to the Secretary of the Corporation, convert said shares into a like number of shares of Common Stock. Section 6. Restrictions on the Right to Transfer or Hypothecate Class B Common Stock. No holder of Class B Common Stock shall have the right or power to sell, transfer, assign, pledge, hypothecate, or otherwise dispose of any share of Class B Common Stock, provided, however, that in the event the Board of Directors of the Corporation, at a meeting thereof duly called and held or by unanimous written consent, shall consent to a sale, transfer, assignment, pledge, hypothecation or other disposition, upon the recording thereof in the minutes of such meeting or the filing of a copy of such written consent with the Secretary of the Corporation, such sale, transfer, assignment, pledge, hypothecation or other disposition of shares of Class B Common Stock may be effected in accordance with the terms of such consent, and such shares of Class B Common Stock shall remain outstanding. In the event that any holder of Class B Common Stock shall sell, assign, transfer, pledge, hypothecate or otherwise dispose of any share of Class B Common Stock without consent, such shares shall automatically and immediately upon the occurrence of such event be converted into, and shall be, an equal number of shares of Common Stock. THIRD: In accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware the holders of the majority of the outstanding Common Stock and Class B Common Stock of the Corporation, authorized the amendment of the Certificate of Incorporation as set forth herein, by written consent pursuant to Section 228 of the General Corporation Law. IN WITNESS WHEREQF, the undersigned have hereunto set their hands this 15th day of , 1988 _____________________________ Anthony R. Barringer President ______________________________ Denis R. Pinkernell Assistant Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. (Pursuant to Section 242 of the General Corporation Law) THE UNDERSIGNED, ANTHONY R. BARRINGER and DENIS R. PINKERNELL, being the duly elected President and Assistant Secretary, respectively, of BARRINGER RESOURCES INC., a Delaware corporation (the "Corporation"), for the purposes of amending the Certificate of Incorporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESOURCES INC. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 7, 1967, under the name of BARRINGER RESEARCH INC. SECOND: The Board of Directors of the Corporation at a meeting thereof duly called and held on January 20, 1988, duly adopted and approved and declared advisable the following resolution with respect to the amendment of Article FOURTH of the Certificate of Incorporation of the Corporation to increase the authorized capitalization to 11,100,000 shares comprised of 10,000,000 shares of Common Stock, par value $.01 per share, and 100,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"), and 1,000,000 shares of Preferred Stock, per value $1.25 per share, in accordance with the provisions of Section 242 of the General Corporation Law: RESOLVED, that subject to the approval of the Stockholders of the Corporation, Article FOURTH of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety as follows: FOURTH: Section 1. Authorized Shares. The total number of shares of stock the Corporation shall have authority to issue is eleven million one hundred thousand (11,100,000) shares comprised of 10,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), and 100,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock") and 1,000,000 of Preferred Stock, par value $1.25 per share ("Preferred Stock"). Section 2. Preferred Stock The designations, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Preferred Stock are as follows: A. Dividends. The holders of the Preferred Stock shall be entitled to receive or have set apart for payment dividends thereon at the rate of $.10 per share per annum, and no more, payable semi-annually for the last preceding dividend period on the last days of June and December in each year in shares of Common Stock valued for such purpose-at the average closing price of the Common Stock in the over-the-counter market over the 20 trading days immediately prior to the record date for each semi-annual payment as quoted by NASDAQ in the over- the-counter market (or organized exchange). No dividend shall be paid or set apart for payment on the Common Stock or Class B Common Stock of the Corporation or any other class of stock or series thereof ranking junior to the Preferred Stock, unless and until dividends at the rate of $.10 per share per annum on the Preferred Stock shall have been paid or set apart for payment in full. B. Liquidating Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation under any circumstances or any voluntary liquidation or winding up of the Corporation, which shall be deemed to have occurred upon the sale of all-or substantially all of its assets, the holders of Preferred Stock will be entitled to receive, prior to and in preference to any distribution of the assets or surplus funds of the Corporation to the holder of any other shares of Capital Stock by reason of the ownership thereof, an amount equal to $1.25 per share and no more (the "Preferential Amount"). If, upon the occurrence of such an event, the assets and funds thus distributed among the holders of Preferred Stock shall be insufficient to permit the payment to such holder of the full Preferential Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Preferred Stock. After the payment or setting apart of the full Preferential Amount required to be paid to the holders of the Preferred Stock, the holders of Capital Stock ranking in liquidation junior to the Preferred Stock shall be entitled to receive all remaining assets or surplus funds of the Corporation. C. Consents of Preferred Stock. Without the affirmative vote or written consent of the holders of a majority of the shares of Preferred Stock at the time outstanding, the Corporation shall not: (a) agree to be acquired, directly or indirectly, by another entity by means of merger, consolidation or otherwise, resulting in the exchange of outstanding shares of Capital Stock for securities or other consideration issued or paid by the acquiring corporation or its subsidiaries, or sell all, or substantially all, of its assets; or (b) alter, change or amend the preferences, rights or privileges of holders of the Preferred Stock contained herein or in the Certificate of Incorporation or By-Laws of the Corporation or elsewhere as in effect on the date that this Certificate of Amendment is filed with the Secretary of the State of Delaware; or (c) alter, change or amend the Certificate of Incorporation or the By-Laws of the Corporation or otherwise to provide for the authorization and issuance of any additional class or series of Capital Stock, including additional shares of Preferred Stock having any rights, preferences or priorities equivalent to or greater than (either in any particular aspect or in the aggregate) the Preferred Stock; or (d) agree to a voluntary liquidation, dissolution, or winding up of the Corporation; or (e) adopt and/or implement any stock option or similar employee stock bonus or incentive plan, except the Permitted Stock Plans. D. Voting Rights. In addition to the voting rights granted to the holders of the Preferred Stock by the laws of the State of Delaware and by Section C hereof, each holder of Preferred Stock shall be entitled at each meeting of the stockholders of the Corporation to that number of votes which is equal to the number of shares of Common Stock into which each share of Preferred Stock is convertible on the record date with respect to such meeting for each share of such stock standing in his name on the books of the Corporation. E. Conversion. (a) Conversion by Holder. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time prior to the fourth anniversary of the date of issuance thereof, into fully paid and nonassessable shares of Common Stock, in accordance with the Conversion Formula (as defined below). Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall (i) surrender the certificate(s) therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, or (ii) notify the Corporation or any transfer agent that such certificates have been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the number of shares of Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder(s) of Preferred Stock a certificate(s) for the number of shares of Common Stock to which the holder shall be entitled. Such conversion shall be deemed to have been made immediately prior to the closing of business on the date of such surrender of the shares of Preferred Stock to be converted or delivery of the aforementioned indemnification agreement, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (b) Conversion by the Corporation. The Corporation may require the conversion of all (but not less than all) of the Preferred Stock in accordance with the Conversion Formula (as defined below) (i) at any time after the fourth anniversary of the date of issuance of such Preferred Stock, or (ii) immediately upon a consolidation, merger or sale of substantially all of the assets of the Corporation under circumstances where the Corporation is not the surviving entity, or (iii) upon the repurchase by the Corporation of all of its then outstanding Class A Warrants or all of its Class B Warrants issued by the Corporation in connection with the sale of Units under a certain Purchase Agreement dated May 10, 1988 between the Corporation and Purchasers named therein. Upon the occurrence of such an event specified in this Section E, and upon the election of the Corporation to require the conversion of all of the Preferred Stock, the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent. The Corporation, however, shall give prompt written notice of such conversion to each holder of Preferred Stock at his last address listed in the Corporation records. The Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing shares of the Preferred Stock being converted are either delivered to the Corporation or any transfer agent, as hereinafter provided, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith. Thereupon, there shall be issued and delivered to such holder, promptly at such office in the holder's name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of the Preferred Stock surrendered were convertible on the date on which such conversion occurred. (c) Conversion Price and Conversion Formula. The Purchase Price per share (the "Purchase Price Per Share") shall be $1.25 and the initial Conversion Price per share for Preferred Stock (the ''Conversion Price") shall be $l.25, subject to adjustment from time to time as provided herein. Each share of the Preferred Stock shall be convertible into that number of shares of Common Stock that results from dividing the Purchase Price Per Share by the Conversion Price in effect at the time of conversion (the "Conversion Formula"). (d) Adjustment of Conversion Price for Stock Splits and Combinations. If the Corporation shall at any time, or from time to time, after the date of the issuance of the Preferred Stock, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased, and conversely, if the Corporation shall at any time or from time to time after the original issue date of the Preferred Stock combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this subsection (d) shall become effective at the close of business on the date the subdivision or combination becomes effective. (e) Adjustment of Conversion Price for Certain Dividends and Distributions. If the Corporation at any time, or from time to time, after the date of the issuance of the Preferred Stock, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then, and in each such event, the Conversion Price then in effect shall be decreased as of the date of such issuance or, at the time or upon the event such a record date shall have been fixed, as of the close of business on such record date (the "Record Date"), by multiplying the Conversion Price then in effect by a fraction, determined as follows: (i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date; and (ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such Record Date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the closing of the business on such Record Date, and thereafter the Conversion Price for such Preferred Stock shall be adjusted pursuant to this section (e) as of the time of each action, or payment of such dividends or distributions. (f) Adjustment for Reclassification, Exchange or Substitution. If the Common Stock issuable upon the conversion of the Preferred Stock shall be changed into the same or a different number of shares of a different class or classes of stock, or other securities or property, whether by reclassification, exchange, substitution or other transaction having similar effect (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for elsewhere in this Section E) then and in each such event the holder of each share of Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reclassification, exchange, substitution or other transaction having similar effect, as did or shall the holders of shares of Common Stock, as if such shares of Preferred Stock had been converted into Common Stock immediately prior to the Record Date with respect to such reclassification, exchange or substitution, all subject to further adjustment as provided herein. (g) Reorganization, Mergers, Consolidations, or Sales of Assets. If at any time, or from time to time, there shall be (other than a subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section E) a capital reorganization involving a merger or consolidation of the Corporation with or into another corporation, or the sale or transfer of all or substantially all of the Corporation's properties and assets to any other person (a "sale"), then, as a part of such reorganization, merger, consolidation or sale, due and adequate provision shall be made so that the holders of the Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock, the number of shares or other securities or property of the Corporation, or of the successor corporation resulting from such merger reorganization, consolidation or sale, as to which a holder of Common Stock deliverable upon conversion would have been entitled to receive as a result of such reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in respect to the rights of the holders of the Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section E (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (h) Sale of Shares Below Conversion Price. If at any time, or from time to time, after the date of issuance of the Preferred Stock and while any shares of the Preferred Stock are outstanding, the Corporation shall issue or sell Additional Shares of Common Stock (as hereinafter defined) or options, warrants, convertible securities or other rights to acquire Common Stock other than as (i) a dividend or other distribution on any class of stock permitted by (e), (ii) a subdivision or combination of shares of Common Stock as provided for in (d) hereof, or (iii) a reclassification, exchange, substitution or other transaction having similar effect as provided for in (f) hereof, for a consideration per share less than the Conversion Price in effect immediately prior to the event, or without consideration, then, and thereafter successively upon each such issuance, the Conversion Price in effect immediately prior to the issuance of such shares shall forthwith be reduced to a price (calculated to the nearest full cent) determined by dividing (a) an amount equal to (i) the total number of shares of Common Stock outstanding immediately prior to such issuance multiplied by the Conversion Price in effect immediately prior to such issuance, plus (ii) the consideration, if any, received by the Company upon such issuance by (b) the total number of shares of Common Stock outstanding immediately after such issuance provided, however, that no adjustment otherwise required hereunder, shall be made unless the reduction in Conversion Price required by this Section, together with all prior reductions which have not resulted in an adjustment to the Conversion Price, shall result in a reduction of the Conversion Price by at least $0.05 per share. For purposes of this (h), the price received by the Corporation for such Additional Shares of Common Stock shall be computed as follows: (x) Cash and Property. If such consideration consists of: (a) cash, the consideration shall be aggregate amount of cash received by the Corporation; (b) property (including intellectual property) other than cash, the consideration shall be the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (c) part of cash or part property and/or stock or other securities of the Corporation or both, the consideration shall be the amount equal to the sum of cash and fair market value of the property actually received by the Corporation computed consistently with the prior paragraphs herein and determined in good faith by the Board. (y) Options. Shares of the Corporation called for pursuant to options and warrants which are held as of the date of a conversion of Preferred Stock by option or warrant holders, and which are not exercised, and have not terminated or lapsed, at the time of such conversion, will be deemed to have been issued, for purposes of the definitions and calculations hereof, at a price per share determined by dividing: (a) the total amount, if any, received and receivable by the Corporation as consideration for the issuance of such options or warrants, plus the minimum aggregate amount of additional consideration (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such options or warrants, by (b) the maximum number of such shares (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such options or warrants. (i) Definitions. The terms "Additional Shares of Common Stock" as used herein shall mean all shares of Common Stock issued or deemed issued by the Corporation after the issuance date of the Preferred Stock, whether or not subsequently reacquired or retired by the Corporation, other than shares of Common Stock issued (i) upon conversion of the Preferred Stock, (ii) upon conversion of $696,000 principal amount of the Corporation's 12 1/2% Convertible Subordinated Debentures due in 1996, or any options or warrants or (iii) upon exercise of options granted to purchase up to 1,197,500 shares of Common Stock of the Corporation under its stock option plans. (j) Accountants' Certificate of Adjustment. In each case of an adjustment of readjustment of the Conversion Price for the number of shares of Common Stock or other securities issuable upon conversion of the Preferred Stock, the Corporation, at its expense, shall cause independent certified public accountants of recognized standing selected by the Corporation (who may be the independent certified Public accountants then auditing the books of the Corporation) to compute such adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder or Preferred Stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or to be received by the Corporation for any Additional Shares of Common Stock issued or sold, (ii) the Conversion Price both before and after such adjustment or readjustment, and (iii) the number of Additional Shares of Common Stock and the type and amount, if any, of other property which at the time would be received upon conversion of the Preferred Stock. (k) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay, in cash, an amount equal to the product of (i) such fraction of a share, multiplied by (ii) the fair market value of one share of the Corporation's Common Stock on the date of conversion, as determined in good faith by the Board. (1) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of Preferred Stock, the Corporation will, subject to the requirements of applicable state law, take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as shall be sufficient for such purposes. F. Nonassessable Status of Stock. All the share of Preferred Stock for which the full consideration determined by the Board of Directors (which shall be not less than the par value of such shares) has been paid or delivered, in cash or property in accordance with the resolutions of the Board of Directors authorizing the issuance of such shares, shall be deemed fully paid-stock and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon. Section 3. Rights of the Classes of Common Stock. The shares of Common Stock and Class B Common Stock shall be identical in every respect and shall be entitled to all of the rights and privileges pertaining to common stock without limitations, prohibitions, restrictions or qualifications, except as otherwise expressly set forth in this Article Fourth. Section 4. Voting Powers. The holders of Common Stock shall be entitled to one (1) vote per share on all matters on which holders of common stock are entitled to vote. The holders of Class B Common Stock shall be entitled to one hundred (100) votes per share on all matters on which holders of common stock of the Corporation are entitled to vote. The holders of Common Stock, Class B Common Stock and the Preferred Stock shall vote as a single class on all matters, except as otherwise required herein or by law. No holder of Common Stock or Class B Common Stock shall have preemptive or preferential rights of subscription to any shares of any class of stock in this Corporation, whether nor or hereafter authorized. Section 5. Conversion of Class B Common Stock into Common Stock. Any holder of Class B Common Stock may, at any time and from time to time, by written notice to the Secretary of the Corporation, convert said shares into a like number of shares of Common Stock. Section 6. Restrictions on the Right to Transfer or Hypothecate Class B Common Stock. No holder of Class B Common Stock shall have the right or power to sell, transfer, assign, pledge, hypothecate, or otherwise dispose of any share of Class B Common Stock, provided, however, that in the event the Board of Directors of the Corporation, at a meeting thereof duly called and held or by unanimous written consent, shall consent to a sale, transfer, assignment, pledge, hypothecation or other disposition, upon the recording thereof in the minutes of such meeting or the filing of a copy of such written consent with the Secretary of the Corporation, such sale, transfer, assignment, pledge, hypothecation or other disposition of shares of Class B Common Stock may be effected in accordance with the terms of such consent, and such shares of Class B Common Stock shall remain outstanding. In the event that any holder of Class B Common Stock shall sell, assign, transfer, pledge, hypothecate or otherwise dispose of any share of Class B Common Stock without consent, such shares shall automatically and immediately upon the occurrence of such event be converted into, and shall be, an equal number of shares of Common Stock. THIRD: In accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware the holders of the majority of the outstanding Common Stock and Class B Common Stock of the Corporation, authorized the amendment of the Certificate of Incorporation as set forth herein, by written consent pursuant to Section 228 of the General Corporation Law. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 15th day of , 1988 _____________________________ Anthony R. Barringer President ______________________________ Denis R. Pinkernell Assistant Secretary CERTIFICATE OF RESTORATION, RENEWAL AND REVIVAL OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. UNDER SECTION 312 OF THE DELAWARE GENERAL CORPORATION CODE _______________________________ The last acting President and assistant secretary of Barringer Resources Inc., a corporation organized and existing under the laws of the State of Delaware, HEREBY CERTIFY AS FOLLOWS: 1. The name of the corporation is Barringer Resources Inc. The date of filing of its original Certificate of Incorporation in the office of the Secretary of State is September 7, 1967. 2. The registered office of the corporation in the State of Delaware is located at 1209 Orange Street, City of Wilmington, County of New Castle, and the name of its registered agent at said address is the Corporation Trust Company. 3. The date when the restoration, renewal and revival of the certificate of incorporation of the corporation is to be effective is the 28th day of February, 1989, same being prior to the date of the expiration of the certificate of incorporation of said corporation and its becoming void by operation of law and by proclamation of the Governor. The restoration, renewal and revival of the certificate of incorporation of this corporation is to be for a perpetual term. 4. The corporation was organized under the laws of the State of Delaware. 5. The corporation was duly organized and was authorized to engage in the business activities set forth in its Certificate of Incorporation until the 1st day of March, 1989, at which time its charter became inoperative and void by operation of law and was subsequently repealed by proclamation of the Governor for non-payment of taxes. 6. This Certificate for Restoration, Renewal and Revival is filed by the authority of the last acting Director of the corporation in accordance with the laws of the State of Delaware. IN WITNESS WHEREOF, we have signed this certificate this _____ day of October, 1989. _____________________________ Frank J. Abella, Jr., Last Acting President ATTEST: ___________________ Denis R. Pinkernell, Last Acting Assistant Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. (Pursuant to Section 242 of the General Corporation Law) THE UNDERSIGNED, STANLEY S. BINDER and DENIS R. PINKERNELL, being the duly elected President and Assistant Secretary, respectively, of BARRINGER RESOURCES INC., a Delaware corporation (the "Corporation"), for the purposes of amending the Certificate of Incorporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESOURCES INC. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 7, 1967, under the name of BARRINGER RESEARCH INC. SECOND: The Board of Directors of the Corporation at a meeting thereof duly called and held on January 4, 1990, duly adopted and approved and declared advisable the following resolution with respect to the amendment of Article FOURTH of the Certificate of Incorporation of the Corporation to: RESOLVED, that subject to the approval of the Stockholders of the Corporation, Article FOURTH of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety as follows: FOURTH: Section 1. Authorizing Shares. The total number of shares of stock the Corporation shall have authority to issue is twenty-two million shares (22,000,000) comprised of 20,000,000 shares of Common Stock, par value S.01 per share ("Common Stock"), and 1,000,000 shares of Convertible Preferred Stock, par value $l.25 per share ("Convertible Preferred Stock") and 1,000,000 shares of Preferred Stock, par value $2.00 per share ("Preferred Stock"). Section 2. Convertible Preferred Stock The designations, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Convertible Preferred Stock are as follows: A. Dividends. The holders of the Convertible Preferred Stock shall be entitled to receive or have set apart for payment dividends thereon at the rate of $.10 per share per annum, and no more, payable semi-annually for the last preceding dividend period on the last days of June and December in each year in shares of Common Stock valued for such purpose at the average closing price of the Common Stock in the over-the-counter market over the 20 trading days immediately prior to the record date for each semi- annual payment as quoted by NASDAQ in the over-the-counter market (or set apart for payment on the Common Stock of the Corporation or any other class of stock or series thereof ranking junior to the Preferred Stock, unless and until dividends at the rate of $.10 per share per annum on the Convertible Preferred Stock shall have been paid or set apart for payment in full. B. Liquidating Preferences. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation under any circumstances or any voluntary liquidation or winding up of the Corporation, which shall be deemed to have occurred upon the sale of all or substantially all of its assets, the holders of Convertible Preferred Stock will be entitled to receive, prior to and in preference to any distribution of the assets or surplus funds of the Corporation to the holder of any other shares of Capital Stock by reason of the ownership thereof, an amount equal to $1.25 per share and no more (the "Preferential Amount"). If, upon the occurrence of such an event, the assets and funds thus distributed among the holders of Convertible Preferred Stock shall be insufficient to permit the payment to such holder of the full Preferential Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Convertible Preferred Stock. After the payment or setting apart of the full Preferential Amount required to be paid to the holders of the Convertible Preferred Stock, the holders of Convertible Preferred Stock shall be entitled to receive all remaining assets or surplus funds of the Corporation. C. Consents of Convertible Preferred Stock. Without the affirmative vote or written consent of the holders of a majority of the shares of Convertible Preferred Stock at the time outstanding, the Corporation shall not: (a) agree to be acquired, directly or indirectly, by another entity by means of merger, consolidation or otherwise, resulting in the exchange of outstanding shares of Capital Stock for securities or other consideration issued or paid by the acquiring corporation or its subsidiaries, or sell all, or substantially all, of its assets; or (b) alter, change or amend the preferences, rights or privileges of holders of the Convertible Preferred Stock contained herein or in the By-Laws of the Corporation or elsewhere as in effect on the date that this Certificate of Amendment is filed with the Secretary of the State of Delaware; or (c) alter, change or amend the Certificate of Incorporation or the By-Laws of the Corporation or otherwise to provide for the authorization and issuance of any additional class or series of Capital Stock, including additional shares of preferred stock having any rights, preferences or priorities equivalent to or greater than (either in any particular aspect or in the aggregate) the Convertible Preferred Stock; or (d) agree to a voluntary liquidation, dissolution, or winding up of the Corporation; or (e) adopt and/or implement any stock option or similar employee stock bonus or incentive plan, except the Permitted Stock Plans. D. Voting Riqhts. In addition to the voting rights granted to the holders of the Convertible Preferred Stock by the laws of the State of Delaware and by Section C hereof, each holder of Convertible Preferred Stock shall be entitled at each meeting of the stockholders of the Corporation to that number of votes which is equal to the number of shares of Common Stock into which each share of Convertible Preferred Stock is convertible on the record date with respect to such meeting for each share of such stock standing in his name on the books of the Corporation. E. Conversion. (a) Conversion by Holder. Each share of Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time prior to the fourth anniversary of the date of issuance thereof, into fully paid and nonassessable shares of Common Stock, in accordance with the Conversion Formula (as defined below). Before any holder of Convertible Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall (i) surrender the certificate(s) therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, or (ii) notify the Corporation or any transfer agent that such certificates have been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the number of shares of Convertible Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder(s) of Convertible Preferred Stock a certificate(s) for the number of shares of Common Stock to which the holder shall be entitled. Such conversion shall be deemed to have been made immediately prior to the closing of business on the date of such surrender of the shares of Convertible Preferred Stock to be converted or delivery of the aforementioned indemnification agreement, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (b) Conversion by the Corporation. The Corporation may require the conversion of all (but not less than all) of the Convertible Preferred Stock in accordance with the Conversion Formula (as defined below) (i) at any time after the fourth anniversary of the date of issuance of such Convertible Preferred Stock, or (ii) immediately upon a consolidation, merger or sale of substantially all of the assets of the Corporation under circumstances where the Corporation is not the surviving entity, or (iii) upon the repurchase by the Corporation of all of its then outstanding Class A warrants or all of its Class B Warrants issued by the Corporation in connection with the sale of Units under a certain Purchase Agreement dated May 10, 1988 between the Corporation and Purchasers named therein. Upon the occurrence of such an event specified in this Section E, and upon the election of the Corporation to require the conversion of all of the Convertible Preferred Stock, the outstanding shares of Convertible Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent. The Corporation, however, shall give prompt written notice of such conversion to each holder of Convertible Preferred Stock at his last address listed in the Corporation's records. The Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing shares of the Convertible Preferred Stock being converted are either delivered to the Corporation or any transfer agent, as hereinafter provided, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith. Thereupon, there shall be issued and delivered to such holder, promptly at such office in the holder's name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of the Convertible Preferred Stock surrendered were convertible on the date on which such conversion occurred. (c) Conversion Price and Conversion Formula. The Purchase Price per share (the ''Purchase Price Per Share") shall be $1.25 and the initial Conversion Price per share for Convertible Preferred Stock (the "Conversion Price") shall be $1.25, subject to adjustment from time to time as provided herein. Each share of the Convertible Preferred Stock shall be convertible into that number of shares of Common Stock that results from dividing the Purchase Price Per Share by the Conversion Price in effect at the time of conversion (the "Conversion Formula"). (d) Adjustment of Conversion Price for Stock splits and Combinations. If the Corporation shall at any time, or from time to time, after the date of the issuance of the Convertible Preferred Stock, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased, and conversely, if the Corporation shall at any time or from time to time after the original issue date of the Convertible Preferred Stock combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this subsection (d) shall become effective at the close of business on the date the subdivision or combination becomes effective. (e) Adjustment of Conversion Price for Certain Dividends and Distributions. If the Corporation at any time, or from time to time, after the date of the issuance of the Convertible Preferred Stock, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then, and in each such event, the Conversion Price then in effect shall be decreased as of the date of such issuance or, at the time or upon the event such a record date shall have been fixed, as of the close of business on such record date (the "Record Date), by multiplying the Conversion Price then in effect by a fraction, determined as follows: (i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date; and (ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided however, if such Record Date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the closing of the business on such Record Date, and thereafter the Conversion Price for such Convertible Preferred Stock shall be adjusted pursuant to this section (e) as of the time of each action, or payment of such dividends or distributions. (f) Adjustment for Reclassification, Exchange or Substitution. If the Common Stock issuable upon the conversion of the Convertible Preferred Stock shall be changed into the same or a different number of shares of a different class or classes of stock, or other securities or property, whether by reclassification, exchange, substitution or other transaction having similar effect (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for elsewhere in this Section E) then and in each such event the holder of each share of Convertible Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reclassification, exchange, substitution or other transaction having similar effect, as did or shall the holders of shares of Common Stock, as if such shares of Convertible Preferred Stock had been converted into Common Stock immediately prior to the Record Date with respect to such reclassification, exchange or substitution, all subject to further adjustment as provided herein. (g) Reorganization, Mergers Consolidations, or Sales of Assets. If at any time, or from time to time, there shall be (other than a subdivision combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section E) a capital reorganization involving a merger or consolidation of the Corporation with or into another corporation, or the sale or transfer of all or substantially all of the Corporation's properties and assets to any other person (a "sale"), then, as a part of such reorganization, merger, consolidation or sale, due and adequate provision shall be made so that the holders of the Convertible Preferred Stock shall thereafter be entitled to receive upon conversion of the Convertible Preferred Stock, the number of shares or other securities or property of the Corporation, or of the successor corporation resulting from such merger, reorganization, consolidation or sale, as to which a holder of Common Stock deliverable upon conversion would have been entitled to receive as a result of such reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in respect to the rights of the holders of the Convertible Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section E (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (h) Sale of Shares Below Conversion Price. If at any time, or from time to time, after the date of issuance of the Convertible Preferred Stock and while any shares of the Convertible Preferred Stock are outstanding, the Corporation shall issue or sell Additional Shares of Common Stock (as hereinafter defined) or options, warrants, convertible securities or other rights to acquire Common Stock other than as (i) a dividend or other distribution on any class of stock permitted by subsection (e) above, (ii) a subdivision or combination of shares of Common Stock as provided for in subsection (d) above, or (iii) a reclassification, exchange, substitution or other transaction having similar effect as provided for in subsection (f) above, for a consideration per share less than the Conversion Price in effect immediately prior to the event, or without consideration, then, and thereafter successively upon each such issuance, the Conversion Price in effect immediately prior to the issuance of such shares shall forthwith be reduced to a price (calculated to the nearest full cent) determined by dividing (a) an amount equal to (i) the total number of shares of Common Stock outstanding immediately prior to such issuance multiplied by the Conversion Price in effect immediately prior to such issuance, plus (ii) the consideration, if any, received by the Corporation upon such issuance by (b) the total number of shares of Common Stock outstanding immediately after such issuance provided, however, that no adjustment otherwise required hereunder, shall be made unless the reduction in Conversion Price required by this subsection (h), together with all prior reductions which have not resulted in an adjustment to the Conversion Price, shall result in a reduction of the Conversion Price by at least $0.05 per share. For purposes of this subsection (h), the price received by the Corporation for such Additional Shares of Common Stock shall be computed as follows: (x) Cash and Property. If such consideration consists of: (a) cash, the consideration shall be aggregate amount of cash received by the Corporation; (b) property (including intellectual property) other than cash, the consideration shall be the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (c) part of cash or part property and/or stock or other securities of the Corporation or both, the consideration shall be the amount equal to the sum of cash and fair market value of the property actually received by the Corporation computed consistently with the prior paragraphs herein and determined in good faith by the Board. (y) Options. Shares of the Corporation called for pursuant to options and warrants which are held as of the date of a conversion of Convertible Preferred Stock by option or warrant holders, and which are not exercised, and have not terminated or lapsed, at the time of such conversion, will be deemed to have been issued, for purposes of the definitions and calculations hereof, at a price per share determined by dividing: (a) the total amount, if any, received and receivable by the Corporation as consideration for the issuance of such options or warrants, plus the minimum aggregate amount of additional consideration (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such options or warrants, by (b) the maximum number of such shares (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such options or warrants. (i) Definitions. The terms "Additional Shares of Common Stock" as used herein shall mean all shares of Common Stock issued or deemed issued by the Corporation after the issuance date of the Convertible Preferred Stock, whether or not subsequently reacquired or retired by the Corporation, other than shares of Common Stock issued (i) upon conversion of the Convertible Preferred Stock, (ii) upon conversion of $693,000 principal amount of the Corporation's 12 1/2% Convertible Subordinated Debentures due in 1996, or any options or warrants or (iii) upon exercise of options granted to purchase up to 1,197,500 shares of Common Stock of the Corporation under its stock option plans. (i) Accountants' Certificate of Adjustment. In each case of an adjustment of readjustment of the Conversion Price for the number of shares of Common Stock or other securities issuable upon conversion of the Convertible Preferred Stock, the Corporation, at is expense, shall cause independent certified public accountants of recognized standing selected by the Corporation (who may be the independent certified public accountants then auditing the books of the Corporation) to compute such adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate by first class mail, postage prepaid, to each registered holder or Convertible Preferred Stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or to be received by the Corporation for any Additional Shares of Common Stock issued or sold, (ii) the Conversion Price both before and after such adjustment or readjustment, and (iii) the number of Additional Shares of Common Stock and the type and amount, if any, of other property which at the time would be received upon conversion of the Convertible Preferred Stock. (k) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Convertible Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay, in cash, an amount equal to the product of (i) such fraction of a share, multiplied by (ii) the fair market value of one share of the Corporation's Common Stock on the date of conversion, as determined in good faith by the Board. (1) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Convertible Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of Convertible Preferred Stock, the Corporation will, subject to the requirements of applicable state law, take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as shall be sufficient for such purposes. F. Nonassessable Status of Stock. All the share of Convertible Preferred Stock for which the full consideration determined by the Board of Directors (which shall be not less than the par value of such shares) has been paid or delivered, in cash or property in accordance with the resolutions of the Board of Directors authorizing the issuance of such shares, shall be deemed fully paid stock and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon. SECTION 3. Preferred Stock The Preferred Stock may be issued from time to time in one or more series with such designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions thereof, as shall be stated in the resolutions adopted by the Board of Directors providing for the issuance of such Preferred Stock or series thereof; and the Board of Directors is hereby expressly vested with authority to fix such designations, preferences and relative participating, optional or other special rights or qualifications, limitations or restrictions for each series, including, but not by way of limitation, the power to fix the redemption and liquidation preferences, the rate of dividends payable and the time for and priority of payment thereof and to determine whether such dividends shall be cumulative or not and to provide for and fix the terms of conversion of such Preferred Stock or any series thereof into Common Stock of the Corporation and fix the voting power, if any, of shares of Preferred Stock or any series thereof. THIRD: At a Special Meeting of the Stockholders of the Corporation duly called and held an February 13, 1990, in accordance with the provisions of Section 242 of the General Corporation law of the State of Delaware, the holders of the majority of the outstanding Common Stock and Convertible Preferred Stock of the Corporation voted in favor of the amendment of the Certificate of Incorporation as set forth herein. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 13th day of February, 1990 and affirm that the statements made therein are true add correct under the penalties of perjury. ____________________________ Stanley S. Binder President ____________________________ Denis R. Pinkernell Assistant Secretary CERTIFICATE OF DESIGNATION OF CLASS A CONVERTIBLE PREPERRED STOCK (Pursuant to Section 151 of the General Corporation Law of the State of Delaware) BARRINGER RESOURCES INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, HEREBY CERTIFIES: That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation as amended, the Board of Directors on February 13, 1990 adopted the following resolution creating a series of 500,000 shares of Preferred Stock designated as Class A Convertible Preferred Stock: RESOLVED, that pursuant to the authority conferred upon the Board of Directors of the Corporation by Article FOURTH of the Amended Certificate of Incorporation of the Corporation, there is hereby established a Class A Convertible Preferred Stock of the par value of $2.00 per share (hereinafter called the "Class A Convertible Preferred Stock") consisting of 500,000 shares and designated Class A Convertible Preferred Stock, and that, subject to the limitations provided by law and by Article FOURTH of the Amended Certificate of Incorporation, the designations, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Class A Convertible Preferred Stock are as follows: A. Dividends. The holders of shares of Class A Convertible Preferred Stock shall be entitled to receive or have set apart for payment dividends thereon at the rate of $.16 per share per annum, payable semiannually for the last preceding dividend on the last days of June and December in each year in, at the option of the Corporation, cash or shares of Common Stock valued for such purpose at the average closing price of the Common Stock in the over-the-counter market over the twenty (20) trading days immediately prior to the recorded date for each semiannual payment an quoted on NASDAQ, as the average of the bid and offer prices quoted for such period in the pink sheets published by the National Quotation Bureau. The amount of dividends payable per share for each dividend period will be computed by dividing by two the $.16 annual rate. B. Liquidating Preferences. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation under any circumstances or any voluntary liquidation or winding-up of the Corporation, which shall be deemed to have occurred upon the sale of all or substantially all of its assets, the holders of Class A Convertible Preferred Stock will be entitled to receive, prior to and in preference to any distribution of the assets of surplus funds of the Corporation to the holder of any other shares of Capital Stock by reason of the ownership thereof, but on a parity with the holders of the Convertible Preferred Stock, an amount equal to $2.00 per share plus accrued and unpaid dividends up to and inclusive of the date of liquidation (the "Class A Preferential Amount"). If, upon the occurrence of such an event, the assets and funds thus distributed among the holders of Class A Convertible Preferred Stock shall be insufficient to permit the payment to such holder of the full Class A Preferential Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Class A Convertible Preferred Stock and the Convertible Preferred Stock. After payment or setting apart of the full Class A Preferential Amount required to be paid to the holders of the Class A Convertible Preferred Stock, the holders of the Class A Convertible Preferred Stock shall be entitled to receive all remaining assets or surplus funds of the Corporation on a parity with the holders of the Convertible Preferred Stock. C. Consents of Class A Convertible Preferred Stock. Without the affirmative vote or consent of the holders of the majority of the shares of Class A Convertible Stock at the time outstanding, the Corporation shall not: (a) Alter, change or amend the preferences, rights or privileges of holders of the Class A Convertible Preferred Stock contained herein or in the By-laws of the Corporation or elsewhere as in effect on the date that this Certificate of Designation is filed with the Secretary of the State of Delaware; or (b) Alter, change or amend the Certificate of Incorporation or the By-laws of the Corporation or otherwise to provide for the authorization and issuance of any additional class or series of Capital Stock, including additional shares of Preferred Stock having any rights, preferences or priorities equivalent to or any greater than (either in any particular aspect or in the aggregate) the Class A Convertible Preferred Stock; or (c) Agree to a voluntary liquidation, dissolution, or winding-up of the Corporation. D. Voting Rights. In addition to the voting rights granted to the holders of the Class A Convertible Preferred Stock by the laws of the state of Delaware and by Section C hereof, each holder of Class A Convertible Preferred Stock shall be entitled at each meeting of the stockholders of the Corporation to that number of votes which is equal to the number of shares of Common Stock into which each share of Convertible Preferred Stock is convertible on the record date with respect to such meeting for each share of such stock outstanding in his name on the books of the Corporation. E. Conversion. (a) Conversion by Holder. Each share of Class A Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time after (i) one (1) year after the date of issuance of the Class A Convertible Preferred Stock; or (ii) the closing price of Common Stock shall have been $3.00 or more per share for sixty (60) consecutive trading days, in accordance with the conversion formula (as defined below), subject to adjustment as described below. Before any holder of Class A Convertible Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holders shall (i) surrender the Certificate(s) therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, or (ii) notify the Corporation or any transfer agent that such certificate has been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the number of shares of Class A Convertible Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder(s) of Class A Convertible Preferred Stock a certificate(s) for the number of shares of Common Stock to which the holder shall be entitled. Such conversion shall be deemed to have been made immediately prior to the closing of business on the date of such surrender of the shares of Class A Convertible Preferred Stock to be converted or delivery of the aforementioned Indemnification Agreement, and the person or persons entitled to receive these shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (b) Conversion Price and Conversion Formula. The initial conversion price per share for Class A Convertible Preferred Stock (the "Conversion Price") shall be $2.00, subject to adjustment from time to time as provided herein. Each share of Class A Convertible Preferred Stock shall be convertible into that number of shares of Common Stock that results from dividing $2.00 by the Conversion Price in effect at the time of conversion (the "Conversion Formula"). (c) Adjustments of Conversion Price for Stock Splits and Combinations. If the Corporation shall at any time, or from time to time, after the date of the issuance of the Class A Convertible Preferred Stock, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that: subdivision shall be proportionately decreased, and conversely, if the Corporation shall at any time or from to time after the original issue date of the Class A Convertible Preferred Stock combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection (c) shall become effective at the close of business on the date the subdivision or combination becomes effective. (d) Adjustment of Conversion Price for Certain Dividends and Distributions. If the Corporation at any time, or from time to time, after the date of the issuance of the Class A Convertible Preferred Stock, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then, and in each such event, the Conversion Price then in effect shall be decreased as of the date of such issuance or, at the time or upon the event such a record date shall have been fixed, as of the close of business on such record date (the "Record Date"), by multiplying the Conversion Price then in effect by a fraction, determined as follows: (i) The numerator of which shall be the total number of shares of Common stack issued and outstanding immediately prior to the Record Date; and (ii) The denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such Record Date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the closing of the business on such Record Date and thereafter the Conversion Price for such Class A Convertible Preferred Stock shall be adjusted pursuant to this Section (d) at the time of such action, or payment of such dividends or distributions. (e) Adjustment for Reclassification, Exchange or Substitution. If the Common Stock issuable upon the conversion of the Class A Convertible Preferred Stock shall be changed into the same or different number of shares of a different class or classes of stock, or other securities or property, whether by reclassification, exchange, substitution or other transaction having similar effect (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provided for elsewhere in this Section E) then and in each such event the holder of each share of Class A Convertible Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reclassification, exchange, substitution or other transaction having similar effect, as did or shall the holders of shares of Common Stock have, as if such shares of Class A Convertible Preferred Stock had been converted into Common Stock immediately prior to the Record Date with respect to such reclassification, exchange or substitution, all subject to further adjustment as provided herein. (f) Reorganization, Mergers, Consolidations, or Sales of Assets. If at any time, or from time to time, there shall be (other than at subdivision, combination, reclassification, exchange or substitution or shares provided for elsewhere in this Section E) a capital reorganization involving a merger or consolidation of the Corporation with or into another corporation, or the sale or transfer of all or substantially all of the Corporation's properties and assets to any other person (a "sale"), then, as a part of such reorganization, merger, consolidation or sale, there shall be due and adequate provision shall be made so that the holders of the Class A Convertible Preferred Stock shall thereafter be entitled to receive upon conversion of the Class A Convertible Preferred Stock, the number of shares or other securities or property of the Corporation, or of the successor corporation resulting from such merger, reorganization, consolidation or sale, as to which a holder of Common Stock deliverable upon conversion would have been entitled to receive as a result of such reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in respect to the rights of the holders of the Class A Convertible Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section E (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Class A Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (g) Sale of Shares Below Conversion Price. If at any time, or from time to time, after the date of issuance of the Class A Convertible Preferred Stock and while any shares of the Class A Convertible Preferred Stock are outstanding, the Corporation shall issue or sell Additional Shares of Common Stock (as hereinafter defined) or options, warrants, convertible securities or other rights to acquire Common Stock other than an (i) a dividend or other distribution of any class of stock permitted by subsection (d) above, (ii) a subdivision or combination of shares of Common Stock as provided for in subsection (c) above, or (iii) a reclassification, exchange, resubstitution or other transaction having similar effect as provided for in subsection (e) above, for a consideration per share less than the Conversion Price in effect immediately prior to the event, or without consideration, then, and thereafter successively upon each such issuance, the Conversion Price in effect immediately prior to the issuance of such shares shall forthwith be reduced to a price (calculated to the nearest full cent) determined by dividing (a) an amount equal to (i) the total number of shares of Common Stock outstanding immediately prior to such issuance multiplied by the conversion Price in effect immediately prior to such issuance, plus (ii) the consideration, if any, received by the Corporation upon such issuance by (b) the total number of shares of Common Stock outstanding immediately after such issuance provided, however, that no adjustment otherwise required hereunder, shall be made unless the reduction in Conversion Price required by this subsection (h), together with all prior reductions which have not resulted in an adjustment to the Conversion Price, shall result in a reduction of the Conversion Price by at lease $0.05 per share. For purposes of this subsection (h), the price received by the Corporation for such Additional Shares of Common Stock shall be computed as follows: (x) Cash and Property. If such consideration consists of: (a) cash, the consideration shall be the aggregate amount of cash received by the Corporation; (b) property (including intellectual property) other than cash, the consideration shall be the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (c) part cash or part property and/or stock or other securities of the Corporation or both, the consideration shall be the amount equal to the sum of the cash and fair market value of the property actually received by the Corporation computed consistently with the prior paragraphs herein and determined in good faith by the Board. (y) Options. Shares of the Corporation called for pursuant to options and warrants which are held as of the date of a conversion of Class A Convertible Preferred Stock by option or warrant holders, and which are not exercised, and have not terminated or lapsed, at the time of such conversion, will be deemed to have been issued, for purposes of the definitions and calculations hereof, at a price per share determined by dividing: (a) the total amount, if any, received and receivable by the Corporation as consideration for the issuance of such options or warrants, plus the minimum aggregate amount of additional consideration (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such options or warrants, by (b) the maximum number of such shares (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such options or warrants. (h) Definitions. The terms "Additional Shares of Common Stock" as used herein shall mean all shares of Common Stock issued or deemed issued by the Corporation after the issuance date of the Class A Convertible Preferred Stock, whether or not subsequently reacquired or retired by the Corporation, other than shares of Common Stock issued (i) upon conversion of the Class A Convertible Preferred Stock, (ii) upon conversion of $693,000 principal amount of the Corporation's 12-1/2% Class A Convertible Subordinated Debentures due in 1996, or any options or warrants or (iii) upon exercise of options or warrants or (iv) upon exercise of options granted to purchase shares of Common Stock of the Corporation under its stock option plans. (i) Accountant's Certificate of Adjustment. In each case of an adjustment of readjustment of the Conversion Price for the number of shares of Common Stock or the securities issuable upon conversion of the Class A Convertible Preferred Stock, the Corporation, at its expense, shall cause independent certified public accountants of recognized standing selected by the Corporation (who may be the independent certified public accountants then auditing the books of the Corporation) to compute such adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate by first class mail, postage prepaid, to each registered holder of Class A Convertible Preferred Stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or to be received by the Corporation for any Additional Shares of Common Stock issued or sold, (ii) the Conversion Price both before and after such adjustment (or readjustment, and (iii) the number of Additional Shares of Common Stock and the type and amount, if any, of other property which at the time would be received upon conversion of the Class A Convertible Preferred Stock. (j) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Class A Convertible Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay, in cash. an amount equal to the product of (i) such fraction of a share, multiplied by (ii) the fair market value of one share of the Corporations' Common Stock on the date of conversion, as determined in good faith by the Board. (k) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Class A Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Class A Convertible Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of Class A Convertible Preferred Stock, the Corporation will, subject to the requirements of applicable state law, take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as shall be sufficient for such purposes. F. Nonassessable Status of Stock. All the shares of Class A Convertible Preferred Stock for which the full consideration determined by the Board of Directors (which shall be not less than the par value of such shares) has been paid or delivered, in cash or property in accordance with the resolutions of the Board of Directors authorizing the issuance of such shares, shall be deemed fully paid stock and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon. G. Redemption of Class A Convertible Preferred Stock. Subject to the limitations of the laws of the State of Delaware, the Corporation may, any time after the closing price of the Common Stock has been $3.00 or more for ninety (90) consecutive trading days, redeem all or a portion of such shares of Class A Convertible Preferred Stock at a redemption price equal to $2.00 per share, plus an amount equal to any accumulated and accrued but unpaid dividends upon thirty (30) days written notice to the holders of the Class A Convertible Preferred Stock. If less than all of the outstanding shares of the Class A Convertible Preferred Stock are to be redeemed, the Corporation shall redeem from each holder of Class A Convertible Preferred Stock on a pro rata basis. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 27th day of November, 1990 and affirm that the statements made herein are true and correct under the penalties of perjury. BARRINGER RESOURCES INC. By:____________________________ Stanley S. Binder, President Attest: ________________________________________ Denis R. Pinkernell, Assistant Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER RESOURCES INC. (Pursuant to Section 242 of the General Corporation Law) THE UNDERSIGNED, Stanley S. Binder and Denis R. Pinkernell, being the duly elected and acting President and Secretary, respectively, of BARRINGER RESOURCES INC., a Delaware corporation (the "Corporation"), for the purpose of amending the Certificate of Incorporation of the Corporation pursuant to Section 242 of the General Corporation Law, DO HEREBY CERTIFY THAT: FIRST: The name of the Corporation is BARRINGER RESOURCES INC. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on September 7, 1967 under the name of Barringer Research, Inc. SECOND: The Board of Directors of the Corporation, at a meeting thereof duly called and held on September 14, 1990, duly adopted and approved and declared advisable the following resolution with respect to the amendment to Article FIRST of the Certificate of Incorporation of the Corporation to change the name of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law: RESOLVED, that, subject to approval of stockholders of the Corporation, Article FIRST of the Certificate of Incorporation of the Corporation be amended to read and provide in its entirety to read as follows: "FIRST: The name of the Corporation is BARRINGER TECHNOLOGIES INC.hereinafter called the "Corporation")." THIRD: The holders of a majority of the outstanding shares of Common Stock ($.01 par value) and the outstanding shares of $1.25 Convertible Preferred Stock of the Corporation, the only outstanding classes of stock of the Corporation entitled to notice of and to vote at the deferred Annual Meeting of Stockholders of the Corporation held on February 12, 1991 approved the amendment of the Certificate of Incorporation as herein set forth in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 13th day of February, 1991. _______________________________ Stanley S. Binder, President _______________________________ Denis R. Pinkernell, Secretary CERTIFICATE OF DECREASE IN THE NUMBER OF SHARES OF CLASS A CONVERTIBLE PREFERRED STOCK AND CERTIFICATE OF DESIGNATION OF CLASS B CONVERTIBLE PREFERRED STOCK (Pursuant to Section 151 of the General Corporation Law of the State of Delaware) BARRINGER TECHNOLOGIES INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, HEREBY CERTIFIES: That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, as amended, the Board of Directors on November 18, 1991 adopted the following resolutions decreasing the number of shares of Class A Convertible Preferred Stock previously designated by Certificate of Designation filed with the Secretary of State of Delaware on November 27, 1991 from 500,000 shares to 270,000 shares, and designating a series of 730,000 shares of Class B Convertible Preferred Stock: RESOLVED, that the resolutions designating an additional 500,000 shares of Class A Convertible Preferred Stock be rescinded, and pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, the number of shares of Class A Convertible Preferred Stock previously designated by Certificate of Designation filed with the Secretary of State of Delaware on November 27, 1991 be decreased to 270,000 shares of such Class A Convertible Stock; and RESOLVED, that pursuant to the authority conferred upon the Board of Directors of the Corporation by Article FOURTH of the Amended Certificate of Incorporation of the Corporation, there is hereby designated a Class B Convertible Preferred Stock, par value $2.00 per share (hereinafter called the "Class B Convertible Preferred Stock") , and that, subject to the limitations provided by law and by Article FOURTH of the Amended Certificate of Incorporation, the designations, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Class B Convertible Preferred Stock are as follows: A. Dividends. The holders of shares of Class A Convertible Preferred Stock shall be entitled to receive or have set apart for payment dividends thereon at the rate of $.16 per share per annum, payable semiannually from the last preceding dividend on the last days of June and December in each year in, at the option of the Corporation, cash or shares of Common Stock valued for such purpose at the average daily bid and offer price of the Common Stock in the over-the- counter market over the twenty (20) trading days immediately prior to the record date for each semiannual payment as quoted on the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if the Common Stock is not quoted on NASDAQ during such period, the average of the bid and offer prices quoted for such period in the pink sheets published by the National Quotation Bureau. The amount of dividends payable per share for each dividend period will be computed by dividing by two the $.16 annual rate. B. Liquidating Preferences. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation under any circumstances or any voluntary liquidation or winding-up of the Corporation, which shall be deemed to have occurred upon the sale of all or substantially all of its assets, the holders of Class B Convertible Preferred Stock will be entitled to receive, prior to and in preference to any distribution of the assets of surplus funds of the Corporation to the holder of any other shares of capital stock of the Corporation by reason of the ownership thereof, but on a parity with the holders of the Class A Convertible Preferred Stock and the Convertible Preferred Stock, par value $1.25 per share of the Corporation (the "Convertible Preferred Stock"), an amount equal to $2.00 per share plus accrued and unpaid dividends up to and inclusive of the date of liquidation (the "Class B Preferential Amount"). If, upon the occurrence of such an event, the assets and funds thus distributed among the holders of Class B Convertible Preferred Stock shall be insufficient to permit the payment to such holder of the full Class B Preferential Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Class B Convertible Preferred Stock, Class A Convertible Preferred Stock and the Convertible Preferred Stock. After payment or setting apart of the full Class B Preferential Amount required to be paid to the holders of the Class B Convertible Preferred Stock, the holders of the Class B Convertible Preferred Stock shall be entitled to receive all remaining assets or surplus funds of the Corporation on a parity with the holders of the Class A Convertible Preferred Stock and Convertible Preferred Stock. C. Consents of Class A Convertible Preferred Stock. Without the affirmative vote or consent of the holders of the majority of the shares of Class B Convertible Stock at the time outstanding, the Corporation shall not: (a) Alter, change or amend the preferenced, rights or privileges of holders of the Class B Convertible Preferred Stock contained herein or in the By-laws of the Corporation elsewhere as in effect on the date that this Certificate of Designation is filed with the Secretary of the State of Delaware; or (b) Alter, change or amend the Certificate of Incorporation or the By-laws of the Corporation or otherwise provide for the authorization and issuance of any additional class or series of capital stock, including additional shares of Preferred Stock having any rights, preferences or priorities equivalent to or any greater than (either in any particular aspect or in the aggregate) the Class B Convertible Preferred Stock; or (c) Agree to a voluntary liquidation, dissolution, or winding-up of the Corporation. D. Voting Rights. In addition to the voting rights granted to the holders of the Class B Convertible Preferred Stock by the laws of the State of Delaware and by Section C hereof, each holder of Class B Convertible Preferred Stock shall be entitled at each meeting of the stockholders of the Corporation to that number of votes which is equal to the number of shares of Common Stock into which each share of Class B Convertible Preferred Stock is convertible on the record date with respect to such meeting for each share of such stock outstanding in his name on the books of the Corporation. E. Conversion. (a) Conversion by Holder. Each share of Class B Convertible Preferred Stock shall be convertible at the option of the holder thereof, at any time after the date of issuance into one share of Common Stock, at the conversion price and subject to adjustment as described below. Before any holder of Class B Convertible Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holders shall (i) surrender the Certificate(s) therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, or (ii) notify the Corporation or any transfer agent that such certificate has been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the number of shares of Class B Convertible Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder(s) of Class B Convertible Preferred Stock a certificate(s) for the number of shares of Common Stock to which the holder shall be entitled. Such conversion shall be deemed to have been made immediately prior to the closing of business on the date of such surrender of the shares of Class B Convertible Preferred Stock to be converted or delivery of the aforementioned Indemnification Agreement, and the person or persons entitled to receive these shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (b) Conversion Price and Conversion Formula. The conversion price per share for Class B Convertible Preferred Stock (the "Conversion Price") shall be $2.00, subject to adjustment from time to time as provided herein. Each share of Class B Convertible Preferred Stock shall be convertible into that number of shares of Common Stock that results from dividing $2.00 by the Conversion Price in effect at the time of conversion (the "Conversion Formula"). (c) Adjustments of Conversion Price for Stock Splits and Combinations. If the Corporation shall at any time, or from time to time, after the date of the issuance of the Class B Convertible Preferred Stock, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before the subdivision shall be proportionately decreased, and conversely, if the Corporation shall at any time or from time to time after the original date of the Class B Convertible Preferred Stock combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be pro portionately increased. Any adjustment at the close of business on the date the subdivision or combination becomes effective. (d) Adjustment of Conversion Price for Certain Dividends and Distributions. If the Corporation at any time, or from time to time, after the date of the issuance of the Class B Convertible Preferred Stock, shall make or issue, or fix a record date for the determination of holders of Common Stock. entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then, and in each such event, the Conversion Price then in effect shall be decreased as of the date of such issuance or, at the time or upon the event such a record date shall have been fixed, as of the close of business on such record date (the "Record Date"), by multiplying the Conversion Price then in effect by a fraction, determined as follows: (i) The numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date; and (ii) The denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such Record Date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion shall be recomputed accordingly as of the closing of the business on such Record Date and thereafter the Conversion Price for such Class B Convertible Preferred Stock shall be adjusted pursuant to this Section (d) at the time of such action, or payment of such dividends or distributions. (e) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock issuable upon the conversion of the Class B Convertible Preferred Stock shall be changed into the same or different number of shares of a different class or classes of stock, or other securities or property, whether by reclassi fication, exchange, substitution or other transaction having similar effect (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provide for elsewhere in this Section E) then and in each such event the holder of each shares of Class B Convertible Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reclassification, exchange, substitution or other transaction having similar effect, as did or shall the holders of shares of Class B Convertible Preferred Stock had been converted into Common Stock immediately prior to the Record Date with respect to such reclassification, exchange or substitution, all subject to further adjustments as provided herein. (f) Reorganization, Mergers, Consolidations, or Sales of Assets. If at any time, or from time to time, there shall be (other than a subdivision, combination, reclassification, exchange or substitution or shares provided for elsewhere in this Section E) a capital reorganization involving a merger or consolidation of the Corporation with or into another corporation, or the sale or transfer of all or substantially all of the Corporation's properties and assets to any other person (a "sale"), then, as a part of such reorganization, merger, consolidation or sale, there shall be due and adequate provision shall be made so that the holders of the Class B Convertible Preferred Stock shall thereafter be entitled to receipt upon conversion of the Class B Convertible Preferred Stock, the number of shares or other securities or property of the Corporation, or of the successor corporation resulting from such merger, reorganization, consolidation or sale, as to which a holder of Common Stock deliverable upon conversion would have been entitled to receive as a result of such reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in respect to the rights of the holders of the Class B Convertible Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section E (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Class B Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (g) Sale of Shares Below Conversion Price. If at any time, or from time to time, after the date of issuance of the Class B Convertible Preferred Stock and while any shares of the Class B Convertible Preferred Stock are outstanding, the Corporation shall issue or sell Additional Shares of Common Stock (as hereinafter defined) or options, warrants, convertible securities or other rights to acquire Common Stock other than as (i) a dividend or other distribution of any class of stock permitted by subsection (d) above, (ii) a subdivision or combination of shares of Common Stock as provided for in subsection (c) above, or (iii) a re classification, exchange, substitution or other transaction having similar effect as provided for in subsection (e) above, for a consideration per share less than the Conversion Price in effect immediately prior to the event, or without consideration, then, and thereafter successively upon each such issuance, the Conversion Price in effect immediately prior to the issuance of such shares shall forthwith be reduced to a price (calculated to the nearest full cent) determined by dividing (a) an amount equal to (i) the total number of shares of Common Stock outstanding immediately prior to such issuance multiplied by the Conversion Price in effect immediately prior to such issuance, plus (ii) the consideration, if any, received by the Corporation upon such issuance by (b) the total number of shares of Common stock outstanding immediately after such issuance provided, however, that no adjustment otherwise required hereunder, shall be made unless the reduction in Conversion Price required by this subsection (g), together with all prior reductions which have not resulted in an adjustment to the Conversion Price, shall result in a reduction of the Conversion Price by at least $0.05 per share. For purposes of this subsection (g), the price received by the Corporation for such Additional Shares of Common Stock shall be computed as follows: (x) Cash and Property. If such consideration consists of: (a) cash, the consideration shall be the aggregate amount of cash received by the Corporation; (b) property (including intellectual property) other than cash, the consideration shall be the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (c) part cash or part property and/or stock or other securities of the Corporation or both, the consideration shall be the amount equal to the sum of the cash and fair market value of the property actually received by the Corporation computed consistently with the prior paragraphs herein and determined in good faith by the Board. (y) Options. Shares of the Corporation called for pursuant to options and warrants which are held as of the date of a conversion of Class B Convertible Preferred Stock by option or warrant holders, and which are not exercised, and have not terminated or lapsed, at the time of such conversion, will be deemed to have been issued, for purposes of the definitions and calculations hereof, at a price per share determined by dividing; (a) the total amount, if any, received and receivable by the Corporation as consideration for the issuance of such options or warrants, plus the minimum aggregate amount of additional consideration (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such options or warrants, by (b) the maximum number of such shares (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subse quent adjustment of such number) issuable upon the exercise of such options or warrants. (h) Definitions. The terms "Additional Shares of Common Stock" as used therein shall mean all shares of Common Stock issued or deemed issued by the Corporation after the issuance date of the Class B Convertible Preferred Stock, whether or not subsequently reacquired or retired by the Corporation, other than shares of Common Stock issued (i) upon conversion of the Class A or Class B Convertible Preferred Stock, (ii) upon conversion of the Corporation's 12 1/2% Class A Convertible Subordinated Debentures due in 1996, or any options or warrants or (iii) upon exercise of options or warrants or (iv) upon exercise of options granted to purchase shares of Common Stock of the Corporation under its stock option plans. (i) Accountants' Certificate of Adjustment. In each case of an adjustment of readjustment of the Conversion Price for the number of shares of Common Stock or the securities issuable upon conversion of the Class B convertible Preferred Stock, the Corporation, at its expense, shall cause independent certified public accountants of recognized standing selected by the Corporation (who may be the independent certified public accountants then auditing-the books of the Corporation) to compute such adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate by first class mail, postage prepaid, to each registered holder of Class B Convertible Preferred Stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or to be received by the Corporation for any Additional Shares of Common Stock issued or sold, (ii) the Conversion Price both before and after such adjustment or readjustment, and (iii) the number of Additional Shares of Common Stock and the type and amount, if any, of other property which at the time would be received upon conversion of the Class B Convertible Preferred Stock. (j) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Class B Convertible Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay, in cash, an amount. equal to the product of (i) such fraction of a share, multiplied by (ii) the fair market value of one share of the Corporation's Common Stock on the date of conversion, as determined in good faith by the Board. (k) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Class B Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Convertible Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of Class B Convertible Preferred Stock, the Corporation will, subject to the requirements of applicable state law, take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as shall be sufficient for such purposes. F. Nonassessable Status of Stock. All the shares of Class B Convertible Preferred Stock for which the full consideration determined by the Board of Directors (which shall be not less than the par value of such shares) has been paid or delivered, in cash or property in accordance with the resolutions of the Board of Directors authorizing the issuance of such shares, shall be deemed fully paid stock and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon. G. Redemption of Class B Convertible Preferred Stock. Subject to the limitations of the laws of the State of Delaware, the Corporation may, at any time after the average bid and offer price of the Common Stock has been $3.00 or more for ninety (90) consecutive trading days, as quoted on NASDAQ, or, if the Common Stock is not quoted on NASDAQ during such period, the average of the bid and offer prices quoted for such period in the pink sheets published by the National Quotation Bureau, redeem all or a portion of such shares of Class B Convertible Preferred Stock at redemption price equal to $2.00 per share, plus an amount equal to any accumulated and accrued but unpaid dividends upon thirty (30) days written notice to the holders of the Class B Convertible Preferred Stock. If less than all of the outstanding shares of Class B Convertible Preferred Stock are to be redeemed, the Corporation shall redeem from each holder of Class B Convertible Preferred Stock on a pro rata basis. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this day of November, 1991 and affirm that the statements made herein are true and correct under the penalties of perjury. BARRINGER TECHNOLOGIES, INC. By:_____________________________ Stanley S. Binder, President Attest: _____________________________ Denis R. Pinkernell, Secretary CERTIFICATE OF CORRECTION OF CERTIFICATE OF DECREASE IN THE NUMBER OF SHARES OF CLASS A CONVERTIBLE PREFERRED STOCK AND CERTIFICATE OF DESIGNATION OF CLASS B CONVERTIBLE PREFERRED STOCK (Pursuant to Section 103(f) of the General Corporation Law of the State of Delaware) BARRINGER TECHNOLOGIES INC., a Delaware corporation (the "Corporation") , pursuant to Section 103 (f ) of the General Corporation Law of the State of Delaware, HEREBY CERTIFIES: That the Certificate Of Decrease In The Number Of Shares Of Class A Convertible Preferred Stock And Certificate of Designation Of Class B Convertible Preferred Stock filed in the Office of the Secretary of the State of Delaware on December 2, 1991, contained certain inaccuracies therein, namely, the words "consisting of 730,000 shares and designated Class B Convertible Preferred Stock" were erroneously dropped at the end of the seventh line of the second "Resolved" paragraph, and references to "Class A" on the first line of paragraph "A. Dividends" and the heading "C. Consent of Class A Convertible Preferred Stock" should in each instance refer to Class B Convertible Preferred Stock; and That the Resolution adopted by the Board of Directors of the Corporation on November 18, 1991 decreasing the designation of Class A Convertible Preferred Stock and designating 730,000 shares of Class B Convertible Preferred Stock reads and provides in its entirety is as follows: RESOLVED, that the resolutions designating an additional 500,000 shares of Class A Convertible Preferred Stock be rescinded, and pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, the number of shares of Class A Convertible Preferred Stock previously designated by Certificate of Designation filed with the Secretary of State of Delaware on November 11, 1990 be decreased to 270,000 shares of such Class A Convertible Stock; and RESOLVED, that pursuant to the authority conferred upon the Board of Directors of the Corporation by Article FOURTH of the Amended Certificate of Incorporation of the Corporation, there is hereby designated a Class B Convertible Preferred Stock, par value $2.00 per share (hereinafter called the "Class B Convertible Preferred Stock"), consisting of 730,000 shares and designated Class B Convertible Preferred Stock and that, subject to the limitations provided by law and by Article FOURTH of the Amended Certificate of Incorporation, the designations, voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Class B Convertible Preferred Stock are as follows: A. Dividends. The holders of shares of Class B Convertible Preferred Stock shall be entitled to receive or have set apart for payment dividends thereon at the rate of $.16 per share per annum, payable semiannually from the last preceding dividend on the last days of June and December in each year in, at the option of the Corporation, cash or shares of Common Stock valued for such purpose at the average daily bid and offer price of the Common Stock in the over-the-counter market over the twenty (20) trading days immediately prior to the record date for each semiannual payment as quoted on the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if the Common Stock is not quoted on NASDAQ during such period, the average of the bid and offer prices quoted for such period in the pink sheets published by the National Quotation Bureau. The amount of dividends payable per share for each dividend period will be computed by dividing by two the $.16 annual rate. B. Liquidating Preferences. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation under any circumstances or any voluntary liquidation or winding-up of the Corporation, which shall be deemed to have occurred upon the sale of all or substantially all of its assets, the holders of Class B Convertible Preferred Stock will be entitled to receive, prior to and in preference to any distribution of the assets of surplus funds of the Corporation to the holder of any other shares of capital stock of the Corporation by reason of the ownership thereof, but on a parity with the holders of the Class A Convertible Preferred Stock and the Convertible Preferred Stock, par value $1.25 per share of the Corporation (the "Convertible Preferred Stock"), an amount equal to $2.00 per share plus accrued and unpaid dividends Lip to and inclusive of the date of liquidation (the "Class B Preferential Amount"). ""f, upon the occurrence of such an event, the assets and funds thus distributed among the holders of Class B Convertible Preferred Stock shall be insufficient to permit the payment to such holder of the full Class B Preferential Amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Class B Convertible Preferred Stock, Class A Convertible Preferred Stock and the Convertible Preferred Stock. After payment or setting apart of the full Class B Preferential Amount required to be paid to the holders of the Class B Convertible Preferred stock, the holders of the Class B Convertible Preferred Stock shall be entitled to receive all remaining assets or surplus funds of the Corporation on a parity with the holders of the Class A Convertible Preferred Stock and Convertible Preferred Stock. C. Consents of Class B Convertible Preferred Stock. Without the affirmative vote or consent of the holders of the majority of the shares of Class B Convertible Stock at the time outstanding, the Corporation shall not: (a) Alter, change or amend the preferenced, rights or privileges of holders of the Class B Convertible Preferred Stock contained herein or in the By-laws of the Corporation elsewhere as in effect on the date that this Certificate of Designation is filed with the Secretary of the State of Delaware; or (b) Alter, change or amend the Certificate of Incorporation or the By-laws of the Corporation or otherwise provide for the authorization and issuance of any additional class or series of capital stock, including additional shares of Preferred Stock having any rights, preferences or priorities equivalent to or any greater than (either in any particular aspect or in the aggregate) the Class B Convertible Preferred Stock; or (c) Agree to a voluntary liquidation, dissolution, or winding-up of the Corporation. D. Voting Rights. In addition to the voting rights granted to the holders of the Class B Convertible Preferred Stock by the laws of the State of Delaware and by Section C hereof, each holder of Class B Convertible Preferred Stock shall be entitled at each meeting of the stockholders of the Corporation to that number of votes which is equal to the number of shares of Common Stock into which each share of Class B Convertible Preferred Stock is convertible on the record date with respect to such meeting for each share of such stock outstanding in his name on the books of the Corporation. E. Conversion. (a) Conversion by Holder. Each share of Class B Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance into one share of Common Stock, at the conversion price and subject to adjustment as described below. Before any holder of Class B Convertible Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holders shall (i) surrender the Certificate(s) therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Common Stock, or (ii) notify the Corporation or any transfer agent that such certificate has been lost, stolen or destroyed and execute an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the number of shares of Class B Convertible Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder(s) of Class B Convertible Preferred Stock a certificate(s) for the number of shares of (Common Stock to which the holder shall be entitled. Such conversion shall be deemed to have been made immediately prior to the closing of business on the date of such surrender of the shares of Class B Convertible Preferred Stock to be converted or delivery of the aforementioned Indemnification Agreement, and the person or persons entitled to receive these shares of Common Stock issuable upon such conversion shall be treated for all pur poses as the record holder or holders of such shares of Common Stock on such date. (b) Conversion Price and Conversion Formula. The conversion price per share for Class B Convertible Preferred Stock (the "Conversion Price") shall be $2.00, subject to adjustment from time to time as provided herein. Each share of Class B Convertible Preferred stock shall be convertible into that number of shares of Common Stock that results from dividing $2.00 by the Conversion Price in effect eat the time of conversion (the "Conversion Formula"). (c) Adjustments of Conversion Price for Stock Splits and Combinations. If the Corporation shall at any time, or from time to time, after the date of the issuance of the Class B Convertible Preferred Stock, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before the subdivision shall be proportionately decreased, and conversely, if the Corporation shall at any time or from time to time after the original date of the Class B Convertible Preferred Stock combine the outstanding shares of Common Stock, the Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment at the close of business on the date the subdivision or combination becomes effective. (d) Adjustment of Conversion Price for Certain Dividends and Distributions. If the Corporation at any time, or from time to time, after the date of the issuance of the Class B Convertible Preferred Stock, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then, and in each such event, the Conversion Price then in effect shall be decreased as of the date of such issuance or, at the time or upon the event such a record date shall have been fixed, as of the close of business on such record date (the "Record Date"), by multiplying the Conversion Price then in effect by a fraction, determined as follows: (i) The numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date; and (ii) The denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the Record Date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such Record Date shall have been fixed and such dividend is riot fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion shall be recomputed accordingly as of the closing of the business on such Record Date and thereafter the Conversion Price for such Class B Convertible Preferred Stock shall be adjusted pursuant to this Section (d) at the time of such action, or payment of such divi dends or distributions. (e) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock issuable upon the conversion of the lass B Convertible Preferred Stock shall be changed into the same or different number of shares of a different class or classes of stock, or other securities or property, whether by reclassification, exchange, substitution or other transaction having similar effect (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets provide for elsewhere in this Section E) then and in each such event the holder of each shares of Class B Convertible Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reclassification, exchange, substitution or other transaction having similar effect, as did or shall the holders of shares of Class B Convertible Preferred Stock had been converted into Common Stock immediately prior to the Record Date with respect to such reclassification, exchange or substitution, all subject to further adjustments as provided herein. (f) Reorganization, Mergers, Consolidations, or Sales of Assets. If at any time, or from time to time, there shall be (other than a subdivision, combination, reclassification, exchange or substitution or shares provided for elsewhere in this Section E) a capital reorganization involving a merger or consolidation of the Corporation with or into another corporation, or the sale or transfer of all or substantially all of the Corporation's properties and assets to any other person (a "sale"), then, as a part of such reorganization, merger, consolidation or sale, there shall be due and adequate provision shall be made so that the holders of the Class B Convertible Preferred Stock shall thereafter be entitled to receipt upon conversion of the Class B Convertible Preferred Stock, the number of shares or other securities or property of the Corporation, or of the successor corporation resulting from such merger, reorganization, consolidation or sale, as to which a holder of Common Stock deliverable upon conversion would have been entitled to receive as a result of such reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in respect to the rights of the holders of the Class B Convertible Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section E (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the C:lass B Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (g) Sale of Shares Below Conversion Price. If at any time, or from time to time, after the date of issuance of the Class B Convertible Preferred Stock and while any shares of the Class B Convertible Preferred Stock are outstanding, the Corporation shall issue or sell Additional Shares of Common Stock (as hereinafter defined) or options, warrants, convertible securities or otherrights to acquire Common Stock other than as (i) a dividend or other distribution of any class of stock permitted by subsection (d) above, (ii) a subdivision or combination of shares of Common Stock as provided for in subsection (c) above, or (iii) a re classification, exchange, substitution or other transaction having similar effect as provided for in subsection (e) above, for a consideration per share less than the Conversion Price in effect immediately prior to the event, or without consideration, then, and thereafter successively upon each such issuance, the Conversion Price in effect immediately prior to the issuance of such shares shall forthwith be reduced to a price (calculated to the nearest full cent) determined by dividing (a) an amount equal to (i) the total number of shares of Common Stock outstanding immediately prior to such issuance multiplied by the Conversion Price in effect immediately prior to such issuance, plus (ii) the consideration, if any, received by the Corporation upon such issuance by (b) the total number of shares of Common stock outstanding immediately after such issuance provided, however, that no adjustment otherwise required hereunder, shall be made unless the reduction in Conversion Price required by this subsection (g), together with all prior reductions which have not resulted in an adjustment to the Conversion Price, shall result in a reduction of the Conversion Price by at least $0.05 per share. For purposes of this subsection (g), the price received by the Corporation for such Additional Shares of Common Stock shall be computed as follows: (x) Cash and Property. If such consideration consists of: (a) cash, the consideration shall be the aggregate amount of cash received by the Corporation; (b) property (including intellectual property) other than cash, the consideration shall be the fair market value thereof at the time of such issue, as determined in good faith by the Board; and (c) part cash or part property and/or stock or other securities of the Corporation or both, the consideration shall be the amount equal to the sum of the cash and fair market value of the property actually received by the Corporation computed consistently with the prior paragraphs herein and determined in good faith by the Board. (y) Options. Shares of the Corporation called for pursuant to options and warrants which are held as of the date of a conversion of Class B Convertible Preferred Stock by option or warrant holders, and which are not exercised, and have not terminated or lapsed, at the time of such conversion, will be deemed to have been issued, for purposes of the definitions and calculations hereof, at a price per share determined by dividing; (a) the total amount, if any, received and receivable by the Corporation as consideration for the issuance of such options or warrants, plus the minimum aggregate amount of additional consideration (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such options or warrants, by (b) the maximum number of such shares (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such options or warrants. (h) Definitions. The terms "Additional Shares of Common Stock" as used therein shall mean all shares of Common Stock issued or deemed issued by the Corporation after the issuance date of the Class B Convertible Preferred Stock, whether or not subsequently reacquired or retired by the Corporation, other than shares of Common Stock issued (i) upon conversion of the Class A or Class B Convertible Preferred Stock, (ii) upon conversion of the Corporation's 12 1/2% Class A Convertible Subordinated Debentures due in 1996, or any options or warrants or (iii) upon exercise of options or warrants or (iv) upon exercise of options granted to purchase shares of Common Stock of the Corporation under its stock option plans. (i) Accountants' Certificate of Adjustment. In each case of an adjustment of readjustment of the Conversion Price for the number of shares of Common Stock or the securities issuable upon conversion of the Class B convertible Preferred Stock, the Corporation, at its expense, shall cause independent certified public accountants of recognized standing selected by the Corporation (who may be the independent certified public accountants then auditing the books of the Corporation) to compute each adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate by first class mail, postage prepaid, to each registered holder of Class B Convertible preferred stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or to be received by the Corporation for any Additional Shares of Common Stock issued or sold, (ii) the Conversion Price both before and after such adjustment or readjustment, and (iii) the number of Additional Shares of Common Stock and the type and amount, if any, of other property which at the time would be received upon conversion of the Class B Convertible Preferred Stock. (j) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Class B Convertible Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay, in cash, an amount equal to the product of (i) such fraction of a share, multiplied by (ii) the fair market value of one share of the Corporation's Common Stock on the date of conversion, as determined in good faith by the Board. (k) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Class B Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conver sion of all outstanding shares of Class B Convertible Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the outstanding shares of Class B Convertible Preferred Stock, the Corporation will, subject to the requirements of applicable state law, take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as shall be sufficient for such purposes. F. Nonassessable Status of Stock. All the shares of Class B Convertible Preferred Stock for which the full consideration determined by the Board of Directors (which shall be not less than the par value of such shares) has been paid or delivered, in cash or property in accordance with the resolutions of the Board of Directors authorizing the issuance of such shares, shall be deemed fully paid stock and the holder of such shares shall not be liable for any further call or assessment or any other payment thereon. G. Redemption of Class B Convertible Preferred Stock. Subject to the limitations of the laws of the State of Delaware, the Corporation may, at any time after the average bid and offer price of the Common Stock has been $3.00 or more for ninety (90) consecutive trading days, as quoted on NASDAQ, or, if the Common Stock is not quoted on NASDAQ during such period, the average of the bid and offer prices quoted for such period in the pink sheets published by the National Quotation Bureau, redeem all or a portion of such shares of Class B (Convertible Preferred Stock at a redemption price equal to $2.00 per share, plus an amount equal to any accumulated and accrued but unpaid dividends upon thirty (30) days written notice to the holders of the Class B Convertible Preferred Stock. If less than all of the outstanding shares of Class B Convertible Preferred Stock are to be redeemed, the Corporation shall redeem from each holder of Class B Convertible Preferred Stock on a pro rata basis. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 4th day of December, 1991 and affirm that the statements made herein are true and correct under the penalties of perjury. BARRINGER TECHNOLOGIES, INC. _____________________________ Stanley S. Binder, President Attest: ______________________________ Denis R. Pinkernell, Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BARRINGER TECHNOLOGIES, INC. Barringer Technologies, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify that: FIRST: At a meeting of the Board of Directors of the Corporation resolutions were adopted setting forth a proposed amendment to the Certificate of Incorporation of the Corporation, declaring the said amendment to be advisable and calling a meeting of the stockholders of the Corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of the Corporation be amended by changing Article TENTH to read and provide in its entirety as follows: "TENTH: (a) A director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. This Article shall not limit the liability of a director for any act or omission occurring prior to the date this Article TENTH becomes effective. (b) The Corporation shall indemnify any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent permitted by applicable law. The determination as to whether such person has met the standard required for indemnification shall be made in accordance with applicable law. Expenses incurred by such director, officer, employee or agent in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article TENTH. (c) The provisions of this Article TENTH shall be deemed to be a contract between the Corporation and each person who serves as such director, officer, employee or agent of the Corporation in any such capacity at any time while this Article TENTH is in effect. No repeal or modification of the foregoing provisions of this Article TENTH nor, to the fullest extent permitted by law, any modification of law shall adversely affect any right of protection of a director, officer, employee or agent of the Corporation existing at the time of such repeal or modification." SECOND: Thereafter, pursuant to resolution of its Board of Directors, the annual meeting of the stockholders of the Corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the holders of the majority of the outstanding stock of the Corporation voted in favor of the amendment of the Certificate of Incorporation as set forth herein. THIRD: The amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its President and attested by its Secretary this day of , 1996. ATTEST: BARRINGER TECHNOLOGIES, INC. ____________________________ By:____________________________ Kenneth S. Wood, Secretary Stanley S. Binder, President CERTIFICATE OF AMENDMENT of CERTIFICATE OF INCORPORATION of BARRINGER TECHNOLOGIES INC. Barringer Technologies Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify that: The following amendment to the Corporation's Certificate of Incorporation approved by the Corporation's Board of Directors and stockholders was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: "Section 1 of Article FOURTH of the Certificate of Incorporation, as amended, of Barringer Technologies Inc. is hereby amended to read in its entirety as follows: FOURTH: Section 1. Authorized Shares. The total number of shares of stock which the Corporation shall have authority to issue is 12,000,000 shares, consisting of 7,000,000 shares of Common Stock, having a par value of $.01 per share ("Common Stock"), 1,000,000 shares of Convertible Preferred Stock, having a par value of $1.25 per share ("Convertible Preferred Stock"), and 4,000,000 shares of Preferred Stock, having a par value of $2.00 per share ("Preferred Stock"). Effective at 11:58 p.m. (the "Effective Time") on September 22, 1995 (the "Effective Date"), each four (4) shares of authorized Common Stock issued and outstanding or held in the treasury of the Corporation immediately prior to the Effective Time shall automatically be reclassified and changed into one (1) validly issued, fully paid and nonassessable share of Common Stock (a "New Share"). Each holder of record of shares of Common Stock so reclassified and changed shall at the Effective Time automatically become the record owner of the number of New Shares as shall result from such reclassification and change. Each such record holder shall be entitled to receive, upon the surrender of the certificate or certificates representing the shares of Common Stock so reclassified and changed at the office of the transfer agent of the Corporation in such form and accompanied by such documents, if any, as may be prescribed by the transfer agent of the Corporation, a new certificate or certificates representing the number of New Shares of which he or she is the record owner after giving effect to the provisions of this Article FOURTH. The Corporation shall not issue fractional New Shares. Stockholders entitled to receive fractional New Shares shall receive, in lieu thereof, cash in an amount equal to the product of (a) the number of shares of the Common Stock held by such holder immediately prior to the Effective Time which have not been classified into a whole New Share, (b) multiplied by (i) the average of the closing bid and closing asked prices of the Common Stock as reported on the NASDAQ Small Capitalization Market on the Effective Date, or (ii) if the Common Stock is not listed on the NASDAQ Small Capitalization Market on the Effective Date, the average of the bid and offer prices on the last day prior to the Effective Date on which such prices were published by the National Quotation Bureau." In accordance with Section 103(e) of the General Corporation Law of the State of Delaware, the amendment set forth in this Certificate shall not become effective until 11:58 p.m. on September 22, 1995. IN WITNESS WHEREOF, Barringer Technologies Inc. has caused this Certificate to be signed and attested by its duly authorized officers, this day of September, 1995. BARRINGER TECHNOLOGIES INC. By:____________________________ Richard S. Rosenfeld, Vice President ATTEST: _____________________________ Kenneth S. Wood, Secretary EX-21 3 EXHIBIT 21 BARRINGER TECHNOLOGIES INC. LIST OF SUBSIDIARIES Name Jurisdiction of Incorporation Barringer Instruments, Inc. Delaware Barringer Consumer Products, LLC New Jersey Barringer Research Ltd. Ontario, Canada Barringer Instruments Ltd Ontario, Canada Barringer Europe, SARL France Barringer Instruments UK, Ltd United Kingdom Candata Resources, Inc. Colorado EX-23 4 EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Barringer Technologies, Inc. New Providence, New Jersey We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-8 (No. 2-94631) of our report dated March 27, 1996, relating to the consolidated financial statements and schedule of Barringer Technologies, Inc. appearing in the Company's Annual report on Form 10-K for the year ended December 31, 1995. We also consent to the references to us under the caption "Experts" in the Prospectus. BDO SIEDMAN, LLP Woodbridge, New Jersey Mach 27, 1996 EX-23 5 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Barringer Technologies, Inc. New Providence, New Jersey We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 33-78888) of our report dated March 27, 1996, relating to the consolidated financial statements and schedule of Barringer Technologies, Inc. appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. We also consent to the references to us under the caption "Experts" in the Prospectus. BDO SEIDMAN, LLP Wooodbridge, New Jersey March 27, 1996 EX-27 6 ART 5 FDS FOR 1995
5 1,000 12-MOS DEC-31-1995 DEC-31-1995 43 0 1,574 41 1,621 3,672 2,101 1,515 4,735 3,302 0 35 0 616 674 4,735 6,374 6,374 3,804 3,804 3,508 0 240 (1,178) 0 (1,178) 351 0 0 (827) (0.27) (0.27)
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