-----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, QaFlkrNUzBtxVcJ3tjiGZ78ZU6MheEdmCR6hIYWPwvp8BLasmHZ4bj+OJtOr6+69 A7oEU5jtuRwF5R8fBMlZKg== 0000905718-96-000124.txt : 19960514 0000905718-96-000124.hdr.sgml : 19960514 ACCESSION NUMBER: 0000905718-96-000124 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-03207 FILM NUMBER: 96561208 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 10QSB 1 BARRINGER'S QUARTERLY REPORT MARCH 31, 1996 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-3207 Barringer Technologies Inc. (Exact name of small business issuer as specified in its charter) Delaware 84-0720473 (State or Other Jurisdiction of (IRS Employer Identification Incorporation or Number) Organization) 219 South Street, New Providence, New Jersey 07974 (Address of principal executive offices) (908) 665-8200 (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Common stock, $0.01 par value - outstanding as of May 9, 1996 - 3,487,203 shares Transitional Small Business Disclosure Format (check one): Yes ; No X BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES INDEX Part I Financial Information - Consolidated Balance Sheets as of March 31, 1996 (unaudited) and December 31, 1995; - Consolidated Statements of Income (unaudited) for the three months ended March 31, 1996 and 1995; - Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 1996 and 1995; - Notes to Consolidated Financial Statements; - Management's Discussion and Analysis of Financial Condition and Results of Operations Part II Other Information Signatures Exhibits BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS March 31, Dec. 31, 1996 1995 (unaudited) Current assets: Cash $ 49,000 $ 43,000 Trade receivables, less allowances of $38,000 and $41,000 2,339,000 1,533,000 Inventories 1,655,000 1,621,000 Prepaid expenses and other 264,000 250,000 Deferred tax asset 225,000 225,000 _________ ________ Total current assets 4,532,000 3,672,000 Property and equipment 558,000 586,000 Investment in unconsolidated subsidiary (note 4) 312,000 334,000 Other assets 116,000 143,000 ________ _______ Total assets $5,518,000 $4,735,000 ========== ========== See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND EQUITY March 31, Dec. 31, 1996 1995 (unaudited) Current liabilities: Bank indebtedness and other notes $1,231,000 $ 744,000 Accounts payable 1,333,000 1,278,000 Accrued liabilities 609,000 723,000 Accrued payroll and related taxes 328,000 257,000 Current portion of long term debt 300,000 300,000 ________ _________ Total current liabilities 3,801,000 3,302,000 Other non-current liabilities 111,000 108,000 _________ _________ Total liabilities 3,912,000 3,410,000 _________ _________ Shareholders' equity: 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 shares outstanding 515,000 515,000 Common stock, $.01 par value, 7,000,000 shares authorized, 3,479,000 shares outstanding 35,000 35,000 Additional paid-in capital 17,685,000 17,685,000 Accumulated deficit (16,353,000) (16,542,000) Foreign currency translation (364,000) (456,000) _____________ ___________ 1,619,000 1,338,000 Less: common stock in treasury at cost, 31,000 shares (13,000) (13,000) __________ __________ Total shareholders' equity 1,606,000 1,325,000 __________ _________ Total liabilities and equity $ 5,518,000 $ 4,735,000 ============ ============ See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED) 1996 1995 ______ ____ Revenues from operations $ 2,354,000 $ 1,328,000 Cost of sales 1,236,000 967,000 _________ ___________ Gross profit 1,118,000 361,000 _________ ___________ Operating expenses: Selling, general and administrative 809,000 629,000 Unfunded research and development 17,000 34,000 ________ ________ 826,000 663,000 ________ ________ Operating income (loss) 292,000 (302,000) _______ _________ Other income (expense): Interest (66,000) (62,000) Income (loss) on unconsolidated subsidiary (22,000) -- Other, net (15,000) (5,000) ________ _______ (103,000) (67,000) _________ ________ Income (loss) from continuing operations 189,000 (369,000) Income from operation held for sale -- 1,000 _______ _________ Net income (loss) for the period 189,000 (368,000) Preferred stock dividend requirements (12,000) (27,000) ________ _________ Net income (loss) attributable to common shareholders $ 177,000 $ (395,000) ======== ========== Per share data (note 3): Income (loss) continuing operations $ 0.05 $ (0.14) Income operation held for sale -- -- ________ ___________ Net Income (loss) per share $ 0.05 $ (0.14) ========= ============ Weighted average shares outstanding 3,479,000 2,872,000 ========== ========== See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three months Three months ended ended March 31, March 31, 1996 1995 ______________________________________ OPERATING ACTIVITIES Net Income (loss) $ 189,000 $(368,000) Items not affecting cash: Depreciation/amortization 54,000 114,000 (Income) loss from unconsolidated Investment 22,000 (1,000) Other 95,000 8,000 Decrease (increase) in non-cash working capital balances (815,000) 20,000 ________ ______ Cash provided by (used in) operating activities (455,000) (227,000) _________ _________ INVESTING ACTIVITIES Purchase of equipment and other (26,000) (148,000) ________ _________ Cash (used in) investing activities (26,000) (148,000) ________ _________ FINANCING ACTIVITIES Increase (reduction) in bank debt and other 487,000 167,000 _________ _________ Cash provided by financing activities 487,000 167,000 _______ _______ Increase (decrease) in cash 6,000 (208,000) Cash at beginning of period 43,000 228,000 _________ ________ Cash at end of period $49,000 $20,000 ========= ======== CHANGES IN COMPONENTS OF NON-CASH WORKING CAPITAL BALANCES RELATED TO CONTINUING OPERATIONS Receivables $(806,000) (701,000) Inventory (34,000) 96,000 Other current assets (14,000) 21,000 Other assets 27,000 29,000 Accounts payable and accrued expenses 12,000 575,000 ________ _______ Decrease (increase) in non-cash working capital balances $(815,000) $20,000 ========== ======== Cash paid during the period for interest $ 53,000 $55,000 ========== ======== Cash paid during the period for income taxes $0 $0 ========== ======== See notes to consolidated financial statements. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 March 31, 1996 and the results of its operations and its cash flows for the three months ended March 31, 1996 and 1995, 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 Annual Report on Form 10-K for the year ended December 31, 1995. 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 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. 3. Per share data is based on the weighted average number of common shares outstanding. 4. The Company maintains a 26% interest in Barringer Laboratories, Inc. and accounts for this investment on the equity method. The following is the condensed results of operations and condensed balance sheet for Labco. Condensed Results of Operations For the three months ended March 31, (in $000's) 1996 1995 Revenues 1,296 1,442 Cost of revenues 1,011 1,080 _____ _____ Gross profit 285 362 Expenses 371 359 Minority interest - 2 ____ _____ Net income (loss) (86) 1 Condensed Balance Sheet As of March 31, 1996 (In $000's) Current assets 1,209 Property and equipment 538 Other assets 50 ______ Total assets 1,797 ====== Current liabilities 729 Long-term debt 138 Equity 930 ______ Total liabilities and equity 1,797 ====== BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Quarter ended March 31, 1996 Compared To Quarter ended March 31, 1995 Sales of all instruments increased by $1,086,000, or 138.5% in the first quarter of 1996 compared to the first quarter of 1995. Sales of Ionscan instruments and related product increased by approximately $1,017,000, or 151.3%, in the first quarter of 1996 compared to the first quarter of 1995, on increased unit sales of approximately 375%. This was due to increased sales of the Model 400 which was introduced in the first quarter of 1995. The Model 400 having a lower selling price than its predecessor Model 350, coupled with being smaller, lighter and containing more features, has resulted in significantly more unit sales. In addition, the Company has been successful in adapting its units to suit customer needs in order to increase unit sales. During this first quarter of 1996, the Company shipped several units against the recently received contract from European Passenger Service Ltd. which contract was for an initial total of 11 units. The balance of the units are scheduled to be shipped during the remainder of 1996. Sales of instruments other than Ionscan products increased by approximately $69,000, or 61.6% in the first quarter of 1996 compared to the first quarter of 1995, 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 some of its older Model 350 units, but still has a significant number of units remaining in its inventory. 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 decreased by approximately $88,000, or 16.2% in the first quarter of 1996 compared to the first quarter of 1995. The reduced revenues are attributable to reduced work performed under the Company's contract with the Emergencies Science Division, Environment Canada to design and build an airborne laser-fluorosensor system 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 the first quarter of 1996. 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 quarter ended March 31, 1996 increased to 47.5% from 27.2% in the same period last year. The gross profit as a percentage of sales for the Instruments business increased to 55.7% in the first quarter of 1996 from 42.9% in the first quarter of 1995. The increase was attributable to better margins on custom sales orders coupled with larger, more efficient production runs. The sale of several Model 350 units, whose carrying value had been reduced in 1995, also contributed to the improvement. The gross profit as a percentage of sales for the Research and Development business improved to 16.0% in the quarter from 4.6% in the same period in 1995. The improvement was due to several small contracts that carried high gross profit margins. The Consumer Products Business did not contribute any gross profit. Selling, general and administrative expenses increased by approximately $180,000, or 28.6% in the first quarter of 1996 over the same period in 1995. Selling expenses increased by $204,000, or 66.0% period to period. Approximately half of the increase is attributable to the expenses associated with the Company's French and United Kingdom offices being open for a full quarter, at full staffing levels. The balance of the increase is attributable to increased levels of sales activity in Canada and the United States and marketing expenses associated with the DrugAlert(TM) product. It is anticipated that selling, general and administrative expenses will remain at this higher level during the remainder of 1996. Unfunded research and development in the first quarter of 1996, applied to IONSCAN(R) technology, decreased by approximately $17,000, or 50.0% from the first quarter of 1995. The level of unfunded research and development engaged in by the Company is primarily a function of the resources, both financial and personnel, that are available at the time. Interest expense increased by approximately $4,000 in the first quarter of 1996, or 6.5% over the same period last year. The increase is the result of higher levels of borrowing, at higher interest rates. Other expense, net of income increased by $10,000 or 200.0% period to period. The increase was due primarily to the changes in exchange rates which generated an increase in such loss of $7,000 during the first quarter of 1996. The balance of the differences relate to several different accounts of income and expense that may not recur from year to year. 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(R). 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. For the three months ended March 31, 1996, the Company was able to return to profitability, recording a profit of $189,000. However, as a result of the previous 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 4 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. Both the Company and its Canadian subsidiary have substantial tax loss and research and development tax credit carryforwards to offset future 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(R) to its newly introduced Model 400 IONSCAN(R). The Company needs additional amounts of capital in order to proceed with product and applications development. During 1995 and for the first quarter of 1996, the Company did not generate positive cash flow from operations. 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, 1995, 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. At March 31, 1996, BRL was in compliance with the terms of the facility. However, there can be no assurances that the Company will continue in compliance with the terms of the facility in the future. Management believes that if the Company fails to comply with the terms of the facility, 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 come due on July 15, 1996. Although the Company believes that it will be able to generate sufficient cash in order to repay the Debentures when due, there can be no assurances that it will be able to do so. 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 three months ended March 31, 1996, were $26,000. The Company does not currently anticipate the need for significant purchases of fixed assets during the remainder of 1996. 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 4 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 contained in this Form 10-QSB 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 Drug Alert product line, expected levels of selling, general and administrative expenses, 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 uncertainties 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 and 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 elsewhere herein. 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-QSB. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 5. Other Information. On May 7, 1996, the Board of Directors of the Company approved the granting of non-qualified options covering a total of 253,000 shares of Common Stock to certain of the Company's executive officers and other key employees and to the Company's independent directors. The options are exercisable for up to five years from the date of grant at an exercise price, subject to adjustment in certain circumstances, of $1.00 per share, the fair market value of the Common Stock on the date of grant. One quarter of the options granted vest immediately, with the remainder vesting ratably over a three-year period. In the event of a "change in control" of the Company, the options will become immediately exercisable. The options are nontransferable, other than pursuant to the laws of descent and distribution, and will terminate in certain circumstances following termination of the recipient's employment (or, in the case of independent directors, service as a director) or in the event of the recipient's death or permanent disability. The grant of the options was not approved by the shareholders and the Company does not intend to seek shareholder approval for the grants. The terms of each grant will be reflected in the terms of an option agreement between the Company and each recipient of an option. The description contained herein is a summary only, is not intended to be complete, and is qualified in its entirety by reference to the terms of such option agreements. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1A The Company's Certificate of Incorporation, as amended. (1) 3.2A By-laws of the Company. (2) 10.27 Stock Purchase Agreement between Barringer Laboratories, Inc. And Barringer Technologies Inc. Dated December 8, 1995. (3) 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-1, File No. 33-43094. (3) Incorporated by reference to the identically numbered exhibit to the Registrant's Form 8-K, filed on December 27, 1995, file No. 0-3207. (b) Reports on Form 8-K Item 5. Other Events - On February 2, 1996, the Company filed a Form 8-K/A to include financial information not previously included in Form 8-K filed on December 27, 1995, regarding the sale of a portion of its stock ownership in Barringer Laboratories, Inc. BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES SIGNATURES In accordance with the requirements of the Exchange Act , the Registrant 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 Chief Financial Officer (Principal Accounting Officer) Date: May 13, 1996 BARRINGER TECHNOLOGIES INC. INDEX TO EXHIBITS Exhibit Number Page No. 27 Financial Data Schedule 16 EX-27 2 ART 5 FDS FOR 1ST QUARTER 10-QSB
5 1,000 3-MOS DEC-31-1996 MAR-31-1996 49 0 2377 38 1,655 4,532 2,131 1,573 5,518 3,801 0 0 616 35 955 5,518 2,354 2,354 1,236 826 37 0 66 189 0 189 0 0 0 189 .05 .05
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