LOCK<---Continued in a Bloomberg story the same day...later on..the following is written:
BN Saf-T-Lok Soars 586%; Gun Lock Maker Faces Challenges (Repeat)
Oct 10 1997 6:35
Saf-T-Lok Soars 586%; Gun Lock Maker Faces Challenges (Repeat)
(Repeating story that moved late yesterday.)
Tequesta, Florida, Oct. 9 (Bloomberg) -- Shares of Saf-T-Lok
soared 586 percent after eight major gun manufacturers
agreed to include a child safety lock with every handgun sold.
That launched shares of the Tequesta, Florida-based gun lock
maker up 2 9/16 to 3 after touching 3 13/16, in trading of 13.8
million shares, making it the second most active stock in U.S.
trading. That's more than double the company's 6.19 million
outstanding shares.
The agreement by gun manufacturers was disclosed in a
ceremony in the White House Rose Garden with President Clinton.
``This will affect eight of 10 handguns made in America,'
Clinton said.
To be sure, Saf-T-Lok President John Gardner doesn't expect
the agreement will translate into higher sales for his company
anytime soon, because his company's products are more expensive
than those of competitors.
``It's certainly cheaper for gun manufacturers to usetrigger locks than a lock from Saf-T-Lok,' Gardner said in an
interview. ``We don't have reason at this time to think they
will' use trigger locks.
The locks the manufacturers agreed to use will add $5 to $10
to the price of each handgun, according to White House estimates.
That compares with the $50 wholesale price for Saf-T-Lok's
combination lock that screws onto a handgun.
Smith & Wesson began shipping a $12 trigger lock made by
Master Lock with every new consumer handgun on Sept. 2. Smith &
Wesson said it reviewed Saf-T-Lok's lock last year, and deemed it
unreliable.
Barretta U.S.A. Inc. is another handgun maker unlikely to
use the Saf-T-Lok device, said Jeff Reh, general counsel.
``We estimate that an effective lock shouldn't cost more
than $10 or $20 per weapon,' he said, explaining why Saf-T-Lok
is an unlikely choice. ``We're not certain they offer a lot more
than other less-expensive locks.'
Delisting Expected
Saf-T-Lok has only sold about 2,000 gun locks since bringing
them to market last year. For the first six months of 1997, it
lost $673,131, or 12 cents a share, on sales of $33,521.
The company has about $500,000 in the bank, and Gardner has
agreed to work for $50,000, half his normal salary, to minimize
the company's burn rate, now about $50,000 a month.
Frank Brooks, the company's founder and chairman, said he
sold about 68,000 shares today, leaving his family with about 1
million shares. He said he hasn't drawn a salary for over
a year.
Saf-T-Lok shares will be delisted from Nasdaq's Small Cap
Market next week, on Oct. 15, unless the company comes back into
compliance with its listing requirements, said Nasdaq spokesman
Mike Shokouhi.
``There is nothing we can see to do between now and Oct.
15,' said Gardner. ``We will not be able to meet the listing
requirement.'
He said shareholders equity last month was $1.4 million,
less than the $2 million demanded by Nasdaq. The company had
total assets of $2.6 million.
``It appears their criteria for us are stricter than for
others,' said Gardner. Normally, Nasdaq requires shareholders
equity of just $1 million, and total assets of $2 million,
according to Nasdaq spokesman Shokouhi.
Gardner said Saf-T-Lok shares will trade on the OTC-BB, an
electronic bulletin board, if they are delisted. ``It's not the end of the world,' he said.
`Unique Product'
Why are investors are scrambling to buy the company's stock
today?
``I believe we have a unique product,' said Gardner, Saf-T-
Lok's president.
Saf-T-Lok's lock is unique in that it is permanently screwed
to the body of the weapon, and can lock a loaded weapon, said
Gardner.
Others are skeptical, including gun manufacturers who
haven't shown much interest in licensing arrangements.
``At the very least, the claims are overstated,' said Kevin
Foley, vice president of product engineering at Smith & Wesson
Corp., a unit of the U.K.'s Tomkins Plc, which has about 20
percent of the U.S. handgun market.
In a July 1997 evaluation made at Saf-T-Lok's request,
Foley wrote that its lock ``cannot be relied upon to prevent
unauthorized use of (a) firearm,' though he said it could serve
as a deterrent.
The device, which is unlocked by depressing three unmarked
buttons, offers 1,000 possible combinations. For easier use, a gun owner can also set it to unlock through a single button push.
``If someone is trying to fiddle with it, it unlocks rather
easily,' said Foley.
Doug Overbury, vice president of engineering for Colt
Manufacturing Co., of Hartford, Connecticut, also examined the
lock and said the weapons-maker has no plans to endorse it.
Rose Garden Ceremony
The agreement by the gun manufacturers was disclosed during
a ceremony this morning when President Clinton stood with
leaders from eight gun companies.
The manufacturers said they will provide child safety
devices with every new handgun they sell. The companies include
Smith and Wesson, Glock, Beretta, Taurus Firearms, Heckler &
Koch, H & R 1871, SigArms and O.F. Mossberg & Sons.
``As is well-known, this administration and the gun industry
from time to time have stood on different sides of various issues
and there may be other disagreements in the future,' Clinton
said. ``But today, we stand together to do what we all know is
right for our children.'
``Child safety devices are an inexpensive and effective
solution to this problem,' Clinton spokesman Mike McCurry said
today.
--David Evans in Vancouver the New York newsroom (212) 318-2300
with reporting by Dina Temple-Raston at the White House (202) 624-
1884 and David A. Andelman in New York /daa /ag |
