-----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, M+j9UEqsqsT+1x5pbJysnnFzvGWMgep2SdZ0BnVUDW5BQYNHFXNWDZVkpXueVQAg KKQ34MRwzvdi+vDLXlVEKA== 0000905718-95-000131.txt : 19951119 0000905718-95-000131.hdr.sgml : 19951119 ACCESSION NUMBER: 0000905718-95-000131 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03207 FILM NUMBER: 95592554 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-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-3207 Barringer Technologies Inc. (Exact name of registrant as specified in its charter) Delaware 84-0720473 (State or Other Jurisdiction of (IRS Employer Identification Incorporation or Organization) Number) 219 South Street, New Providence, New Jersey 07974 (Address of principal executive offices) (Zip Code) (908) 665-8200 ____________________________________________________________ (Registrant's telephone number, including area code) ____________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common stock, $0.01 par value - outstanding as of November 8, 1995 - 3,411,572 shares BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES INDEX PART I -- Financial Information Item 1. Financial Statements. Consolidated Balance Sheets as of September 30, 1995 (unaudited) and December 31, 1994; Consolidated Statements of Operations for the nine months and three months ended September 30, 1995 and 1994 (unaudited); Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 1995 (unaudited); Consolidated Statements of Cash Flows for the nine months and three months ended September 30, 1995 and 1994 (unaudited); Notes to Consolidated Financial Statements (unaudited); Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II - Other Information Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K SIGNATURES Part I - - Financial Information Item 1. Financial Statements BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) ASSETS Sept 30, 1995 Dec 31, 1994 (UNAUDITED) Current Cash and equivalents $ 151 $ 267 assets: Receivables, less 2,355 2,565 allowance of $445 and $539 Inventories 1,419 1,790 Net assets held for sale (note 4) 993 - Prepaid expenses and other 294 220 Deferred tax asset (note 2) 225 225 _______________________ TOTAL CURRENT ASSETS 5,437 5,067 Property and 651 1,364 equipment, net Other assets 101 361 ______________________ TOTAL ASSETS $6,189 $ 6,792 See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) LIABILITIES AND Sept 30, Dec 31, SHAREHOLDERS' 1995 1994 EQUITY (unaudited) Current liabilities: Bank indebtedness and other notes $1,053 $ 1,160 Accounts payable 1,217 1,632 Accrued liabilities 1,389 1,393 Liabilities to operation held 485 - for sale Current portion of long-term debt 300 230 ___________________ TOTAL CURRENT LIABILITIES 4,444 4,415 Long term debt, net of current portion - 451 TOTAL LIABILITIES 4,444 4,866 Minority interest - 740 Shareholders' Convertible preferred stock, - 555 equity (notes 9 $1.25 par value, 1,000 shares and 10): authorized, 0 and 444 shares outstanding, respectively Class A convertible preferred 101 101 stock, $2.00 par value, 1,000 shares authorized, 82 shares outstanding, less discount of $64 Class B convertible preferred 635 635 stock, $2.00 par value, 730 shares authorized, 318 shares outstanding Common stock, $.01 par value, 34 29 7,000 and 5,000 shares authorized, 3,412 and 2,872 shares outstanding, respectively Additional paid-in capital 17,542 16,036 Accumulated deficit (16,148) (15,633) Cumulative foreign currency (406) (524) translation adjustment 1,758 1,199 Less: common stock in treasury at cost, 31 shares (13) (13) _______ ______ TOTAL SHAREHOLDERS' EQUITY 1,745 1,186 _____ ______ TOTAL LIABILITIES AND EQUITY $ 6,189 $ 6,792 ======= ======
See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS IN THOUSANDS EXCEPT PER SHARE DATA (UNAUDITED) Three months ended Nine months ended September 30, September 30, 1995 1994 1995 1994 Revenues from operations $ 1,434 $ 1,593 $4,544 $5,299 Cost of sales 952 823 2,844 2,958 _________________________________________ Gross profit 482 770 1,700 2,341 _________________________________________ Operating expenses: Selling, general 656 742 1,956 2,139 and administrative Unfunded research and development 29 4 133 178 _________________________________________ 685 746 2,089 2,317 _________________________________________ Operating income (loss) (203) 24 (389) 24 __________________________________________ Other income (expense): Interest (64) (49) (186) (144) Other, net (35) (45) (83) 61 __________________________________________ (99) (94) (269) (83) ___________________________________________ Loss from continuing operations (302) (70) (658) (59) Income from operation held for sale 139 20 194 1 ___________________________________________ Net loss for the period (163) (50) (464) (58) Preferred stock dividend requirements (16) (24) (67) (81) __________________________________________ Net loss attributable to to common shareholders $ (179) $ (74) $ (531) $ (139) ============================================== Per share data (notes 3 and 9): (Loss) continuing operations $ (0.09) $(0.03) $(0.23) $ (0.05) Income operation held for sale 0.04 - 0.06 - ______________________________________________ Net loss per share $ (0.05) $(0.03) $(0.17) $ (0.05) Weighted average shares outstanding 3,412 2,853 3,209 2,818 ============================================
See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (IN THOUSANDS) (UNAUDITED) Class A Class B Foreign Conv. Conv. Conv. Currency Common Paid-in Pref. Pref. Pref. Transl. Stock Capital Stock Stock Stock Deficit Adjust Balance Dec. 31, 1994 $ 29 $ 16,036 $555 $101 $635 $(15,633) $ (524) Sale of securities net 4 901 of expenses Conversion of preferred stock 1 554 (555) 1995 dividend on preferred 51 (51) shares Current period adjustment 118 Net loss (464) _________________________________________________________________________ Balance - September 30, 1995 $ 34 $ 17,542 $ 0 $101 $635 $(16,148) $ (406) ==================================================================
__________________________ *Net of receivable from sale of stock of $274. See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS ) (UNAUDITED) Three months ended Nine months ended September 30, September 30, September 30, 1995 1994 1995 1994 OPERATING ACTIVITIES Net loss $(163) $ (50) $(464) $(58) Items not affecting cash: Depreciation/amortization 81 228 390 625 Minority interest - (24) - (2) (Income) from operation held for (139) (194) Other 24 225 105 (98) Decrease (increase)in non-cash working capital balances related to: Continuing operations 399 (67) (264) (1,066) Operation held for sale - - 352 - _____________________________________________ Cash provided by (used in) operating activities 202 312 (75) (599) ______________________________________________ INVESTING ACTIVITIES Purchase of equipment and other (128) (482) (390) (639) Release of cash held in escrow - - - 225 (Increase) decrease in investment in operation held - for sale 55 - (78) - Operation held for sale - - 10 - _____________________________________________ Cash (used in) investing activities (73) (482) (458) (414) _____________________________________________ FINANCING ACTIVITIES Reduction in long-term debt - (65) (64) (159) Increase (reduction) in bank debt and other (304) 48 (30) 543 Proceeds on issuance of securities and other - - 905 243 Operation held for sale - - (394) - ____________________________________________ Cash provided by (used in) financing activities (304) (17) 417 627 activities ____________________________________________ (Decrease) in cash and cash equivalents (175) (187) (116) (386) Cash at beginning of period 326 287 267 486 ____________________________________________ Cash at end of period $ 151 $ 100 $ 151 $ 100 ============================================
See notes of consolidated financial statements BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) (Continued) Three Months ended Nine Months ended September 30, September 30, 1995 1994 1995 1994 CHANGES IN COMPONENTS OF NON-CASH WORKING CAPITAL BALANCES RELATED TO CONTINUING OPERATIONS $83 $(119) $(674) $206 Receivables Inventory 90 187 371 (950) Other current assets (114) (73) (122) (110) Accounts payable and accrued expenses 340 (62) 161 (212) ______________________________________________ (Decrease) increase in non- cash working capital balances $399 $(67) $(264) $(1,066) ============================================ Cash paid during the period of interest $ 53 $ 70 $ 203 $ 162 ============================================= Cash paid during the period for income - $ 7 - $ 14 taxes =============================================
See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of the Company, the unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the consolidated financial position of the Company as of September 30, 1995 and the results of its operations and its cash flows for the three months and nine months ended September 30, 1995 and 1994, respectively. The accounting policies followed by the Company are set forth in the Notes to Consolidated Financial Statements in the audited consolidated financial statements of Barringer Technologies Inc. and Subsidiaries included in its Form 10-K for the year ended December 31, 1994. This report should be read in conjunction therewith. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. 2. As a result of the Company's history of losses, a valuation allowance has been provided for all U.S. deferred tax assets and for substantially all of the Canadian deferred tax assets. The 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 1995 earnings, which includes earnings from certain contracts, as well as available tax planning strategies, management considers realization of the unreserved deferred tax asset more likely than not. 3. Per share data is based on the weighted average number of common shares outstanding. See note 9, below, for information concerning a one- for-four reverse stock split. 4. The Company maintains voting control of more than 50% of the common stock of Barringer Laboratories Inc. ("Labco") through an irrevocable agreement with another Labco shareholder, which requires such shareholder, for as long as it is a shareholder of Labco, to vote its 83,000 shares of Labco common stock in the manner designated by the Company. The agreement also gives the Company the right to bid on such shares of Labco should the record holder wish to sell them. The Company is actively seeking a purchaser for its 47% interest in Labco. Accordingly, the financial statements reflect Labco as an asset held for sale. Management believes it will ultimately dispose of Labco at a gain. Labco is currently operating profitably and management anticipates that Labco will continue to do so for the remainder of 1995. However, management will reevaluate this estimate quarterly. Where appropriate, the Company's Consolidated Statement of Operations and Statement of Cash Flows have been reclassified to reflect Labco as an operation held for sale. The following are the condensed results of operations and condensed balance sheet for Labco. Condensed Results of Operations (In Thousands) Three months Nine Months ended ended September 30, September 30, 1995 1994 1995 1994 ________________________________________ Revenues $1,867 $1,560 $4,956 $ 4,390 Costs and expenses: Cost of sales 1,216 1,159 3,438 3,430 Expenses 356 357 1,105 958 _______________________________________ 1,572 1,516 4,543 4,388 Operating Income 295 44 413 2 Minority interest 156 24 219 1 _________________________________________ Net Income $ 139 $ 20 $ 194 $ 1 =========================================
Condensed Balance Sheet As of September 30, 1995 (In Thousands) Current assets $ 1,290 Property and equipment, net 644 Other assets 517 _____ Total assets $ 2,451 ===== Current liabilities 663 Long term debt 65 Equity 1,723 _____ Total liabilities and equity $ 2,451 ===== 5. 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 ("Units") consists 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. The Company has allocated a portion of the proceeds for working capital purposes and has used a portion of the proceeds to repay indebtedness owed by its wholly owned subsidiary, Barringer Research Limited, ("BRL") to its bank, Toronto-Dominion Bank (the "Bank"). 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. 6. On September 28, 1995, the Company entered into an agreement (the "Agreement") with the Bank, pursuant to which the Bank agreed that the Company's Canadian subsidiary may have until September 30, 1995 to come into compliance with certain amended covenants specified in the Agreement. In exchange, the Company agreed to utilize a portion of the net proceeds it may receive upon the sale of its investment in Labco to increase the capital of BRL, the Company's Canadian subsidiary. In addition, the Company agreed to provide the Bank with additional collateral to secure its advances to BRL. As of September 30, 1995, BRL was in compliance with such covenants. However, there is no assurance that the Company will continue to remain in compliance with such covenants during the fourth quarter or thereafter, nor as to the action, if any, the Bank would take upon such non- compliance. 7. 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. 8. During the three months and nine months ended September 30, 1995, the Company was successful in renegotiating amounts due to certain vendors. Accordingly, the Company was able to reduce its liability to such entities by approximately $73,000 and $231,000, respectively. 9. At the Company's annual meeting, held on August 30, 1995, the shareholders approved a one-for-four reverse stock split (the "Reverse Split") of the Company's Common Stock, par value $0.01 per share, effective as of 11:58 p.m. on September 22, 1995. Accordingly, all share and per share data have been retroactively restated to reflect the Reverse Split. 10. At the Company's reconvened annual meeting, held on September 14, 1995, the shareholders approved a proposed amendment to the Company's Certificate of Incorporation to increase the authorized shares of capital stock of the Company. Accordingly, the Company's authorized shares of Common Stock were increased from 5 million to 7 million shares (after giving effect to the Reverse Split discussed in note 9) and the Company's authorized shares of Preferred Stock were increased from 1 million shares to 4 million shares, effective as of 11:58 p.m. on September 22, 1995. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES Management's Discussion and Analysis of Results of Operations and Financial Condition In order to devote its full resources to its instrument business, primarily the further development, marketing and production of its new Model 400 IONSCAN[R] and the Company's newly introduced consumer product the Barringer DrugAlert[TM] System, the Company has determined to sell its 47% ownership in Labco. The Company is required to use a portion of the proceeds of a sale of Labco to repay indebtedness to Labco and to increase the capital of BRL. Labco is an analytical services company, principally engaged in environmental monitoring, geochemical analysis and image processing for the hydrocarbon, and mineral exploration industries. Since such a sale would represent the disposal of a separate and distinct business segment, the Company's financial statements, where appropriate, have been reclassified to reflect Labco as an operation held for sale. The remaining business segment develops, manufactures and markets specialty analytical instruments for security, law enforcement, exploration and environmental monitoring applications. Accordingly, management's discussion and analysis of financial condition and results of operations is presented on that basis. CONTINUING OPERATIONS Quarter ended September 30, 1995 compared to Quarter ended September 30, 1994 Instrument sales for the quarter ended September 30, 1995 decreased by $174,000, or 11.5%, compared to the same period last year. The decrease was the result of relatively flat unit sales at lower average selling prices for the Company's new Model 400 IONSCAN[R] which is less expensive than its predecessor. The Company relies upon sales to governmental agencies, which are subject to mandated procurement processes and budgetary constraints. As a result, the selling cycle for its products often extends over long periods, which can result in significant variations in quarterly sales. Sales of the research and development and other business for the quarter ended September 30, 1995 increased by $15,000, or 18.8%, compared to the same quarter last year. The improvement was the result of continued work on a Cdn. $1,967,000 contract awarded to the Company in late 1994. The contract was for the design and construction of an airborne laser- fluorosensor system to precisely monitor the proliferation of oil spills in order to enhance environmental clean-up efforts. It is anticipated that the first unit will be completed in 1997. The overall gross profit and the gross profit as a percentage of sales, for the Company, for the quarter ended September 30, 1995 decreased from $770,000 (48.3%) to $482,000 (33.6%) compared to the same quarter last year. The gross profit and the gross profit percentage on research and development and other business for the quarter ended September 30, 1995 decreased from $6,000 (7.5%) to a negative $170,000 (179%) compared to the same quarter last year. The negative gross profit in the research and development segment was caused by the reduced billings for the quarter not being sufficient to absorb the segments fixed overhead. As work accelerates on these contracts, the Company expects this trend will reverse. The gross profit and the gross profit percentage on instrument sales for the quarter ended September 30, 1995 decreased from $764,000 (50.5%) to $652,000 (48.7%) compared to the same quarter last year. The slight decrease in the gross profit in the instrument's segment was due primarily to product mix. Selling, general and administrative expenses for the quarter ended September 30, 1995 decreased by $86,000, or 11.6%, over the comparable period last year. Selling and marketing expenses increased by $64,000, or 14.7%, due to the full impact of the French and United Kingdom offices which were just getting under way during the third quarter of 1994 and the costs associated with the Barringer DrugAlert[TM] sales and marketing program. General and administrative expenses decreased by $150,000, or 49.0%, due primarily to reductions aggregating $63,000 negotiated in amounts owed to suppliers of services. and $120,000 of additional income recognized on the termination of the Company's Canadian Pension Plan as of December 31, 1993. Unfunded research and development expense, primarily applied to the Company's IONSCAN[R] technology, increased by $25,000 or 625.0%. As manpower is required for funded projects, unfunded research and development costs can fluctuate quarter to quarter. Interest expense increased by $15,000, or 30.6%, due to higher levels of borrowings and increased interest rates. Other expense, net of income, in the quarter ended September 30, 1995 decreased by $10,000 or 22.2% over the same period in the prior year. The decrease occurred in various miscellaneous categories. Loss from continuing operations was $302,000 for the quarter ended September 30, 1995 as compared to a loss of $70,000 for the comparable quarter last year. The increase in the loss was primarily due to reduced margins on reduced sales primarily in the research and development segment. Income from operations held for sale for the quarter ended September 30, 1995 of $139,000 is an increase of $119,000 compared to the same quarter last year. The improvement was due to the increased volume of sales and improved margins. Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30, 1994 This analysis should be read in conjunction with the analysis of the third quarter appearing above which contains additional information. Instrument sales for the nine months ended September 30, 1995 decreased by $1,369,000, or 26.8%, over the same period last year. During this period last year, the Company was completing work on its Eurotunnel contract, which contributed greatly to sales. The Company substantially completed the Eurotunnel contract in April 1994. Sales of the research and development business for the nine months ended September 30, 1995 increased by $614,000, or 315%, compared to the same period last year. The increase was the result of commencing work on a Cdn. $1,967,000 contract that was awarded to the Company in late 1994. The contract was for the design and construction of an airborne laser- fluorosensor system to precisely monitor the proliferation of oil spills in order to enhance environmental clean-up efforts. It is anticipated that the first unit will be completed in 1997. The overall gross profit and the gross profit as a percentage of sales, for the Company, for the nine months ended September 30, 1995 decreased from $2,341,000 (44.2%) to $1,700,000 (37.4%) compared to the same period last year. The gross profit and the gross profit percentage on research and development and other business for the nine months ended September 30, 1995 decreased from a negative $74,000 (37.9%) to a negative $136,000 (16.8%) compared to the same period last year. The negative gross profit in the research and development segment was caused by the reduced billings for the third quarter not being sufficient to absorb the segments fixed overhead. As work accelerates on these contracts, the Company expects this trend will reverse. The gross profit for the nine months ended September 30, 1995 decreased from $2,415,000 to $1,836,000 compared to the same period last year while the gross profit as a percentage of sales increased from 47.3% to 49.2%. The slight increase in the gross profit percentage in the instrument's segment was due primarily to maintaining higher sales prices on the discontinued Model 350 IONSCAN[R] which inventory costs were partially written down in 1994. Selling, general and administrative expenses for the nine months ended September 30, 1995 decreased by $183,000, or 8.6%, over the comparable period last year. Selling and marketing expenses increased by $195,000, or 18.5%, due to the full impact of the French and United Kingdom offices which were just getting under way this time last year and the costs associated with the Barringer DrugAlert[TM] sales and marketing program. General and administrative expenses decreased by $378,000, or 34.8%, due primarily to reductions aggregating $227,000 negotiated in amounts owed to suppliers of services and $120,000 of additional income recognized on the termination of the Company's Canadian Pension Plan as of December 31, 1993. The Company continues to closely monitor its expenses. Unfunded research and development, primarily applied to IONSCAN[R] technology, decreased by $45,000, or 25.3%, from the comparable period in 1994. As resources are required for funded projects, unfunded research and development can fluctuate period to period. Interest expense increased by $42,000, or 29.2%, due to higher levels of borrowings and increased interest rates. Other expense, net of income, for the nine months ended September 30, 1995 was $83,000 as compared to other income, net of expense, of $61,000 for the same period last year. The major reason for the $144,000 unfavorable variance was due to a foreign exchange gain of $77,000 for the nine months ended September 30, 1994 against a foreign exchange loss of $89,000, primarily related to Canadian currency, for the comparable period this year. Loss from continuing operations was $658,000 for the nine months ended September 30, 1995 as compared to a loss of $59,000 for the comparable period last year. The increase in the loss was due to reduced sales, lower margins coupled with the large swing from foreign exchange gains to losses relating primarily to Canadian currency. Income from operations held for sale for the nine months ended September 30, 1995 of $194,000 as compared to income from operations held for sale of $1,000 for the comparable period last year. The improvement was due to the increased volume of sales and improved margins. Capital Resources and Liquidity Operating Activities The Company's reduced level of sales during the year ended December 31, 1994 and the first three quarters of 1995 and the resultant losses of $2,565,000 and $464,000, respectively, resulted in a severe cash shortage during the last half of 1994 and during all of 1995. The Company continues to restructure its payments to suppliers to conserve cash. The cash shortages have created dislocations in the production process and have caused production inefficiencies. The Company manufactures to a sales forecast one quarter in advance. To the extent that orders outpace the forecast, the Company may not be able to fill all its orders in a particular quarter. Orders not filled in one quarter will be backordered and filled in the following quarter. The Company believes that this problem will resolve itself through the sale of its investment in Labco and sales of its remaining Model 350 IONSCANS[R]. However, there can be no assurance that this problem will be resolved or that it will not get worse. On March 28, 1995, the Company introduced Barringer DrugAlert System, a new consumer product, an in-home drug detection and identification system available to consumers, that will allow them to determine the presence of illicit drugs from the sampled areas. The Company has entered into a number of distribution agreements in the United States and overseas to market the product on behalf of the Company. The Company is in the process of evaluating a number of marketing techniques in order to determine the most effective means to maximize sales of this product in the United States. In connection therewith, the Company conducted a market test using a 60 second commercial which was aired on cable television networks in two selected geographical areas of the United States for a three week period. The results indicated that there are barriers to selling that must be better addressed in order to achieve success through this marketing technique. The Company is evaluating methodology in this regard. At the same time, the Company is also in the process of formulating a sales strategy to sell the product at retail pharmacies. A retail market test is now being planned and is expected to commence by the end of the fourth quarter. The Company does not anticipate significant sales of this product in 1995 and there can be no assurance that markets for this product will, in fact, develop or as to the timing thereof. Financing Activities The Company has issued an interest bearing note to Labco in the amount of $452,000, which is currently due December 31, 1995 (the "Labco Note"). At December 31, 1994, the Company was in arrears on its interest payments pursuant to the Labco Note in the approximate amount of $18,000. In early 1995, Labco agreed to extend the due date on the Labco Note from May 31, 1995 to December 31, 1995, in exchange for which, on April 7, 1995, the Company issued to Labco a warrant which currently represents the right to purchase 6,250 shares of Common Stock at $4.00 per share, which warrant expires on April 6, 1997. At that time, the Company agreed that it would, on June 30, 1995, pay to Labco the accrued interest, including past due amounts on the Labco Note, which amounts have been paid in full. The Company intends to repay the principal of the Labco Note on or before the amended due date from the sale of its 47% interest in Labco and/or the proceeds from sales of the Company's securities. If the Company is unable to pay to Labco the principal amount of the Labco Note when due, the Company presently intends to negotiate an extension of time during which to pay such principal. If the Company is unable to repay such principal when due and is unsuccessful in obtaining an extension of time during which to pay the principal, the Company could lose its investment in Labco. Presently, the Company has pledged its stock of Labco to Labco and Labco is contractually entitled to such stock upon the Company's default on the Labco note. The Company continues to negotiate with several potential purchasers, including Labco, for its shares of Labco's common stock. However, there can be no assurance that the Company will be able to conclude any of those transactions or as to the timing thereof. Pursuant to the terms of the line of credit arrangement Labco entered into with a commercial lender, Labco is prohibited from transferring funds to the Company in the form of dividends, loans or advances or repayments. As a result of prior non-compliance under BRL's line of credit with the Toronto-Dominion Bank (the "Bank") BRL'S borrowing under the line of credit exceeded the amount available thereunder. The Company has sought an extension of time from the Bank in which to come into compliance with the applicable borrowing. On September 28, 1995, the Company entered into an agreement with the Bank pursuant to which the Bank agreed that the Company's Canadian subsidiary may have until September 30, 1995 to come into compliance with certain amended covenants specified in the Agreement. In exchange, the Company has agreed to dispose of its interest in Labco and to increase the capital of BRL by an amount equal to the net proceeds of such sale. In addition, the Company agreed to provide the Bank with additional collateral to secure its advances to the Canadian subsidiary. At September 30, 1995, the Company was in compliance with such covenants specified in the agreement. However, there is no assurance that the Company will continue to remain in compliance with such covenants during the fourth quarter or thereafter, nor as to the action, if any, the Bank would take upon such non-compliance. On May 9, 1995, the Company completed a private placement of its securities to two institutional investors. The private placement consisted of 125 units priced at $6,000 each for an aggregate sales price of $750,000. Each unit (a "Unit") consists 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. In another private placement on June 30, 1995, the Company sold an additional 22 Units to seven of its Officers and Directors for aggregate proceeds of $132,000 and sold an additional six Units to two other private investors for aggregate proceeds of $36,000. The additional Units did not contain the additional three year warrant contained in the May 9, 1995 private placement. The Company has allocated a portion of the proceeds for working capital purposes, principally for manufacturing the Company's new Model 400 IONSCAN[R] and related sales and promotional expenses, including up to $150,000 to develop a sales, marketing and operational infrastructure to support sales of its new in-home drug detection and identification system. The Company has used an additional portion of the proceeds to repay indebtedness owed by its Canadian subsidiary to its Bank. Investment Activities Purchases of fixed assets for the nine months ended September 30, 1995 were approximately $319,000. The Company anticipates that for the balance of 1995 it will require approximately $20,000 in capital additions. The funds required for this equipment would be provided by financing or investment activities. The Company has no additional major commitments for capital purchases at this time. BRL had determined that its current facility is no longer adequate for its purpose and accordingly had, as of July 29, 1995, signed a lease for a new, more modern, facility. Pursuant to the terms of the new lease, as an incentive to enter into the lease, the landlord will reimburse BRL for substantially all the expenses incurred in the relocation. The new facility is in the same general location as BRL's existing facility. The annual operating expenses under the new lease are substantially the same as they would have been under the former lease. The Company commenced BRL's relocation in mid-September. Inflation Inflation was not a material factor in either the sales or the operating expenses of the Company during the periods presented herein. OPERATION HELD FOR SALE Quarter Ended September 30, 1995 Compared to Quarter Ended September 30, 1994 Sales of Services for the three months ended September 30, 1995 of $1,867,000 represents an increase of $307,000 (19.7%) from the same period in 1994. The Environmental Division experienced an increase in sales of $523,000 (69.6%) due to volume increases of $157,000 from existing customers requesting radiochemical analyses and an existing customer's special project, which generated sales of $138,000 for the three months ended September 30, 1995. Additional increases were due to volume increases of $149,000 from other existing customers, and new customer's sales of $79,000 in the three months ended September 30, 1995. Environmental Division October, 1995 sales were substantially ahead of October, 1994 sales and Management believes sales for the rest of the year will equal 1994 sales levels. The Mineral Division, which includes Labco's Mexican operation, experienced a decrease of $216,000 (19.7%) due to customer's cancellation of drilling projects as a result of the severe wet weather in the Sierra Mountains of California and Nevada in April and May 1995. Additionally, there were 1995 volume decreases related to non-recurring 1994 sales of $90,000 from two special one time projects. These decreases were offset by sales increase in Mexico of $89,000 due to the addition of new customers in Mexico. Mineral Division sales should continue to increase for the rest of the year, but will still be below 1994 sales levels. Gross profit as a percentage of sales for the three months ended September 30, 1995 was 34.9% as compared to 25.7% for the same period in 1994. This increase was primarily due to higher Environmental Division sales, production efficiencies in the Environmental Division resulting from higher sales, and fixed costs allocated over a larger sales base. Selling, general, and administration expenses for the three months ended September 30, 1995 of $336,000 were at approximately the same level as those from the 1994 period. Other expenses for the three months ended September 30, 1995 were $20,000 compared to $23,000 for the same period in 1994. This decrease in other expenses of $3,000 was due to higher interest income and higher other income, which increased $18,000 from 1994, offset by strategic alliance expense of $18,000 and translation loss of $3,000. Other income of $3,000 was higher than 1994 other expenses of $14,000, the latter of which reflected compensation expense of $13,000 related to short term borrowings from a related party. Strategic alliance expense is related to professional fees paid to an independent investment banking firm to evaluate Labco and to identify potential sources of additional debt or equity financing. For the three months ended September 30, 1995, Labco had income before income taxes of $295,000 compared to income before income taxes of $43,000 for the same period in 1994. This increase of $252,000 was primarily due to higher Environmental sales, production efficiencies in the Environmental Division, fixed costs allocated over a larger sales base, and higher interest income, offset by strategic alliance expense of $18,000 and translation loss of $3,000. Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30, 1994 Sales of Services for the nine months ended September 30, 1995 of $4,956,000 represents an increase of $566,000 (12.9%) from the same period in 1994. The Environmental Division experienced an increase of $1,126,000 (50.4%) due to volume increases of $408,000 from existing customers requesting radiochemical analyses, an existing customer's large project, which generated sales of $254,000, additional volume increases of $31,000 from other existing customers and new customer's sales of $193,000. Additionally, there was another customer special project which generated sales of $240,000 in the nine months ended September 30, 1995. Environmental Division October, 1995 sales were ahead of October, 1994 sales and Management believes sales for the rest of the year will equal 1994 sale levels. The Mineral Division, which includes Mexico, experienced a decrease in sales of $560,000 (25.9%) due to customer volume decreases in the first five months of 1995 related to the cancellation of drilling projects caused by severe wet weather in the Sierra Mountains of California and Nevada. Additionally, there were 1995 volume decreases related to non-recurring 1994 sales of $283,000 from two special one time projects. These decreases were offset by sales in Mexico of $324,000 for the nine months ended September 30, 1995 compared to sales of $15,000 in Mexico for the same period in 1994. Gross profit as a percentage of sales for the nine months ended September 30, 1995 was 30.6% as compared to 21.9% for the same period in 1994. This increase was primarily due to higher Environmental Division sales, production efficiencies in the Environmental Division resulting from higher sales, and fixed costs allocated over a larger sales base. Selling, general and administrative expenses for the nine months ended September 30, 1995 of $1,025,000 increased by $27,000 (2.7%) from the same period in 1994 primarily due to higher general and administrative expenses, including travel, directors fees, and professional fees. Other expenses for the nine months ended September 30, 1995 were $80,000 compared to other income of $41,000 for the same period in 1994. This increase in other expenses of $121,000 was due to income of $76,000 from the net recovery of a contingency reserve in the nine months ended September 30, 1994, 1995 expenses consisting of a non-recurring charge of $20,000, strategic alliance expense of $30,000, and translation loss of $19,000 from Labco's Mexican subsidiary, offset by higher interest income and other income. The non-recurring charge is Labco's estimated cost to dispose of six 50-gallon barrels of hazardous waste, for which Labco had previously paid, however, the vendor went out of business. As such under current environmental laws and regulations, Labco is still responsible for the proper disposal of this waste. Strategic alliance expense is related to professional fees paid to an independent investment banking firm to evaluate Labco and to identify potential sources of additional debt or equity financing. The recovery of the contingency reserve in the three months ended September, 1994 was related to the warranties, representations, and guarantees made by Labco in the 1992 sale of its Canadian subsidiary. These warranties, representations, and guarantees expired on May 31, 1994. For the nine months ended September 30, 1995, Labco had income before income taxes of $413,000 compared to income before income taxes of $3,000 for the same period in 1994. This increase in income of $410,000 was primarily due to higher Environmental sales, production efficiencies in the Environmental Division, and fixed costs allocated over a larger sales base. These increases were offset by higher general and administrative expenses, the non-recurring charge of $20,000, strategic alliance expense of $30,000, translation losses of $19,000, relating to Mexican currency and the recovery of the contingency reserve of $76,000, which incurred in 1994. Capital Resources and Liquidity Cash and cash equivalents totaled $333,000 at September 30, 1995, compared with $39,000 at December 31, 1994. The $294,000 increase in cash and cash equivalents resulted from cash provided by operating activities of $712,000 which was offset by cash used in investing activities of $164,000 and net cash used in financing activities of $254,000 primarily for the reduction of long-term debt. Cash used for investing activities was for the purchase of property and equipment consisting of $70,000 of lab equipment, $60,000 of vehicles, and $34,000 of computer hardware and software to upgrade the Laboratory Information Management System. Labco has a working line of credit from a lending institution. This line of credit is equal to 80% of Labco's eligible accounts receivable. This line of credit is used to fund Labco's current working capital requirements and has also been used to guarantee a $150,000 letter of credit required by the Colorado Department of Health to increase the level of Labco's Radiochemistry License. This increase in the license gives Labco the ability to grow the radiochemistry analytical business. Management believes that the existing line of credit agreement is adequate to meet Labco's working capital requirements for the next 12 months. Inflation Inflation was not a material factor in either the sales or the operating expenses of Labco during the periods presented herein. PART II - - OTHER INFORMATION BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES Item 4. Submission of Matters to a Vote of Security Holders (a) The 1995 Annual Meeting of the Stockholders of the Company was held on August 30, and reconvened on September 14, 1995. (b) Not applicable (c)(1) The results of the voting at the Annual meeting of the Stockholders were as follows: 1. Election of Directors: Nominee For Withheld Stanley S. Binder 11,762,189 372,511 John H. Davies 11,770,631 364,069 John J. Harte 11,765,631 369,069 Richard D. Condon 11,766,631 368,069 John D. Abernathy 11,770,059 364,109 James C. McGrath 11,766,631 368,069 2. Amendment to the Company's Certificate of Incorporation to effect a one-for-four reverse stock split of the Company's common stock, par value $0.01 per share ("Common Stock"): Holders of the Common Stock For:11,034,253 Against:732,410 Abstain:128,324 Not-voted:239,715 Holders of the Preferred Stock For: 214,226 Against:6,875 Abstain:18,612 Not-voted:134,637 Holders of All Classes of Stock For:11,248,479 Against:739,285 Abstain:146,936 Not-voted:374,352 3. The ratification of the appointment of BDO Seidman, LLP, as independent auditors of the Company's 1995 financial statements. For: 11,855,243 Against: 110,149 Withheld:169,308 (c)(2) The results of the voting at the reconvened Annual Meeting of Stockholders were as follows: 1. 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. Holders of the Common Stock For:6,458,821 Against:1,278,602 Abstain: 1,124,950 Not-voted: 3,3554,424 Holders of the Class A Preferred Stock For: 399,009 Against:25,488 Abstain: 0 Not-voted: 0 Holders of the Class B Preferred Stock For: 271,234 Against: 0 Abstain: 0 Not-voted: 0 Holders of All Classes of Stock For: 7,129,064 Against: 1,304,090 Abstain: 1,124,950 Not-voted: 3,554,424 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K. Item 5. Other Events - On September 28, 1995 the Company filed a Report on Form 8-K regarding its entry into an agreement with the Toronto-Dominion Bank. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements 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. (Registrant) /S/ Stanley S. Binder _____________________ Stanley S. Binder President /S/ Richard S. Rosenfeld ________________________ Richard S. Rosenfeld Vice President, Finance, Chief Financial Officer, (Principal Accounting Officer and Principal Financial Officer) Date: November 13, 1995 EX-27 2 ART 5 FDS FOR 3RD QUARTER 10-Q
5 THIS SCHEDULE CONTAIN SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BARRINGER TECHNOLGIES' INC.'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 U.S. DOLLARS DEC-31-1994 JAN-1-1995 SEP-30-1995 9-MOS 1 151 0 2,800 445 1,419 5,437 2,473 1,822 6,189 4,444 0 34 0 736 988 6,189 4,544 4,544 2,844 2,844 2,172 0 186 (658) 0 (658) 194 0 0 (464) (0.17) (0.17)
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