<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission
March 31, 1999 File Number 0-8241
- --------------------------- ---------------------------
Barringer Laboratories, Inc.
- -------------------------------------------------------------------------------
(Name of small business issuer in its charter)
Delaware 84-0951626
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15000 West 6th Avenue, Suite 300, Golden, Colorado 80401-5047
- -------------------------------------------------------------------------------
(Address of principal executive office)
Issuer's telephone number, including area code (303) 277-1687
---------------------------------
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes __X__ No _____
Number of shares outstanding as of March 31, 1999 -- 6,562,871 of Common
Stock, $.01 par value.
<PAGE>
BARRINGER LABORATORIES, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
- Consolidated Balance Sheets as of March 31, 1999 (Unaudited) and
December 31, 1998
- Consolidated Statements of Operations (Unaudited) for the Three
Months Ended March 31, 1999 and 1998;
- Consolidated Statements of Cash Flows (Unaudited) for the Three
Months Ended March 31, 1999 and 1998;
- Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Signatures
Page 2
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 36,000 $ 173,000
Trade receivables, less
allowance of $40,000 and
$34,000 for doubtful accounts 960,000 1,064,000
Prepaid expenses and other 362,000 247,000
Subscription receivable - 255,000
---------- ----------
Total Current Assets 1,358,000 1,739,000
---------- ----------
Property and Equipment:
Machinery and equipment 2,328,000 2,304,000
Machinery and equipment under
capital lease obligations 234,000 234,000
Leasehold improvements 664,000 664,000
Office furniture and equipment 90,000 90,000
---------- ----------
3,316,000 3,292,000
Less accumulated depreciation
and amortization 3,024,000 2,964,000
---------- ----------
Net Property and Equipment 292,000 328,000
Certificate of Deposit 150,000 150,000
Other Assets 101,000 101,000
---------- ----------
Total Assets $1,901,000 $2,318,000
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ----------
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities:
Trade accounts payable $ 333,000 $ 247,000
Accrued liabilities:
Payroll, compensation and
related expenses 244,000 343,000
Accrued property tax 24,000 46,000
Other 278,000 190,000
Current maturities of obligations
Under capital leases 73,000 74,000
---------- ----------
Total Current Liabilities 952,000 900,000
Obligations under capital leases,
less current maturities 49,000 71,000
---------- ----------
Total Liabilities 1,001,000 971,000
---------- ----------
Minority Interest - -
Shareholders' Equity
Preferred stock, $2.00 par value,
1,000,000 shares authorized;
none issued - -
Common stock, $0.01 par value,
shares authorized, 10,000,000;
issued and outstanding 6,562,871
and 3,407,315 66,000 34,000
Common stock to be issued - 575,000
Additional paid-in capital 3,726,000 3,184,000
Accumulated deficit (2,869,000) (2,423,000)
Translation Adjustment (23,000) (23,000)
---------- ----------
Total Shareholders' Equity 900,000 1,347,000
---------- ----------
Total Liabilities and
Shareholders' Equity $1,901,000 $2,318,000
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales of Services $1,206,000 $1,664,000
Cost of Services Sold 1,198,000 1,271,000
---------- ----------
Gross Profit 8,000 393,000
---------- ----------
Selling, General and
Administrative Expenses 441,000 525,000
---------- ----------
Operating Loss (433,000) (132,000)
Other Income (Expense):
Interest income 2,000 7,000
Interest expense (8,000) (3,000)
Translation gain (loss) (7,000) (4,000)
Other - 3,000
---------- ----------
Total Other Income (Expense) (13,000) 3,000
---------- ----------
Loss before Minority Interest
in Loss of Subsidiary (446,000) (129,000)
Minority Interest in Loss
of Subsidiary - 6,000
---------- ----------
Net Loss $(446,000) ($123,000)
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Per Share Data:
Net loss per share:
Basic $ (.07) $ (.08)
---------- ----------
---------- ----------
Diluted $ (.07) $ (.08)
---------- ----------
---------- ----------
Weighted average common shares
outstanding
Basic 6,562,871 1,590,649
---------- ----------
---------- ----------
Diluted 6,562,871 1,590,649
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $(446,000) $(123,000)
Items not affecting cash
Depreciation and amortization 60,000 49,000
Bad debt expense 6,000 7,000
Minority interest share in loss
of subsidiary - (6,000)
Decrease (increase) in operating
assets net of operating
liabilities 35,000 (136,000)
--------- ---------
Cash Provided by (used in)
Operating Activities (345,000) (209,000)
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and
equipment (24,000) (25,000)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 255,000 -
Payments on capital lease obligations (23,000) (7,000)
--------- ---------
Cash provided by (used in)
Financing Activities 232,000 (7,000)
--------- ---------
Increase (Decrease) in cash (137,000) (241,000)
Cash and cash equivalents
- beginning of period 173,000 524,000
--------- ---------
Cash and cash equivalents
- end of period $ 36,000 $ 283,000
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 7
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Decrease (increase) in
operating assets net of
operating liabilities
Trade receivables $ 98,000 $ 123,000
Other current assets (115,000) (127,000)
Accounts payable and
accrued liabilities (35,000) (138,000)
Other 87,000 6,000
--------- ---------
Total - net $ 35,000 $(136,000)
--------- ---------
--------- ---------
Cash paid during the
period for interest $ 8,000 $ 3,000
--------- ---------
--------- ---------
Cash paid during the
period for income taxes $ - $ -
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 8
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of the Company, the unaudited financial statements contain
all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position of the Company and its
subsidiaries, as of March 31, 1999 and the results of their operations
and their cash flows for the three months ended March 31, 1999 and 1998.
The accounting policies followed by the Company are set forth in the
Notes to Consolidated Financial Statements in the 1998 audited financial
statements of Barringer Laboratories, Inc. and Subsidiaries included in
its Annual Report on Form 10-KSB for the year ended December 31, 1998.
The Form 10-KSB should be read in conjunction herewith.
2. MANAGEMENT'S PLAN
The Company's operating plan for the year will concentrate on rebuilding
sales in the Mineral Division which suffered a steep decline during 1998,
largely due to the depressed level of worldwide mineral exploration
activity. Management estimates that the Company's operating activities,
plus the necessary investments to rebuild Mineral Division sales, will
require additional funding of approximately $500,000 in 1999.
The Company is addressing this funding requirement in several ways. A
$150,000 Certificate of Deposit currently pledged to the Colorado
Department of Health in order to meet an environmental regulatory
requirement relating to laboratories involved in radiochemistry
activities has been released and replaced with a Financial Guarantee
Bond in May 1999. The Company is also in the process of negotiating a line
of credit backed by the Company's accounts receivable. The Company has also
established a relationship with a company engaged in the factoring of
accounts receivable and is utilizing this relationship to meet its short
term cash requirements pending the outcome of the negotiations to secure
a line of credit.
There can be no assurance that the Company will not require additional
financial resources to enable it to meet its
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<PAGE>
obligations in the future or that any future funds required will be
generated from operations or from the aforementioned or other potential
sources. The lack of additional capital could force the Company to
substantially curtail operations and/or capital replacements and could
therefore have a material adverse effect on the Company's business.
Page 10
<PAGE>
3. ACCOUNTING POLICIES
NEW ACCOUNTING PRONOUNCEMENTS
SFAS 133, "Accounting for Derivative Instruments and Hedging Activities"
requires companies to record derivatives on the balance sheet as assets
or liabilities measured at fair market value. Gains or losses resulting
from changes in the values of those derivatives are accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in
fair value or cash flows. SFAS 133 is effective for fiscal years
beginning after June 15, 1999. Management believes that the adoption of
SFAS 133 will have no effect on its financial statements.
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities", requires that the costs of start-up activities, including
organization costs, be expensed as incurred. This Statement is effective
for financial statements issued for fiscal years beginning after December
15, 1998. Management believes that the adoption of SOP 98-5 will have no
material effect on its financial statements.
LOSS PER SHARE
The Company follows the provision of SFAS 128, "Earnings Per Share" SFAS
128 provides for the calculation of "Basic" and Diluted" loss per share.
Basic loss per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted loss per share
reflects the potential dilution of securities that could share in the
loss of an entity, similar to fully diluted loss per share. In loss
periods, dilutive common equivalent shares are excluded as the effect
March would be anti-dilutive.
For the three months ended March 31, 1999 and 1998, dilutive common stock
equivalents of 191,600 and 191,600, respectively, were not included in the
computation of diluted per share data because their effect was antidilutive.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACCOUNTING POLICIES (CONTINUED)
PRINCIPLES OF TRANSLATION
Effective January 1, 1997, the Company remeasured the assets and
liabilities of its Mexican subsidiary from pesos to U.S. dollars since
Mexico is considered a highly inflationary economy. Non-monetary assets
and liabilities are remeasured at the exchange rate at the date of the
change in the functional currency, which rate then becomes, in effect,
the "historical rate" for translating those assets in the future.
Monetary assets and liabilities are remeasured at the exchange rate in
effect at the date a transaction occurs. Gains and losses related to the
remeasurement of monetary assets and liabilities are included in income.
The Peruvian and Nicaraguan subsidiaries are reported in U.S. dollars.
3. INCOME TAXES AND NET OPERATING LOSS CARRYFORWARDS
At March 31, 1999, the Company has alternative minimum tax credits of
approximately $15,000 available to offset future federal income taxes on
an indefinite carryforward basis and unused net operating loss
carryforwards of approximately $4,611,000. Such net operating loss
carryforwards expire in varying amounts from 1999 to 2018 and are subject
to certain limitations under Section 382 of the Internal Revenue Code
("IRC") of 1986 as amended.
As of March 31, 1999, a valuation allowance has been recorded, as
Management of the Company is not able to determine that the deferred tax
asset will be realized.
Page 12
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. INVESTIGATION
In early 1998, the Company learned that certain employees in one section
of its environmental laboratory did not consistently follow laboratory
procedures as set forth in the Company's Standard Operating Procedures
and applicable test methods. Management believes the employee practices
in question may have affected a small percentage of the soil and water
test results reported to clients of the environmental laboratory. The
Company commenced an internal investigation, engaged outside advisors to
assist in the investigation, and initiated a broad program of corrective
actions. In addition, the Company informed the United States
Environmental Protection Agency ("EPA") of its investigation and its
corrective action program.
EPA representatives conducted an investigation into this matter in
accordance with Agency policy towards voluntary disclosures of this type,
and the Company cooperated fully in that process. To date, no agency or
other party has brought any action or proceeding against the Company.
By letters dated December 24, 1998, and March 19, 1999, the EPA has
informed the Company that it does not intend to take any civil or
criminal enforcement action against the Company as a result of the
matters reported by the Company. Management believes that the EPA
investigation into this matter has concluded.
Page 13
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SALE OF COMMON STOCK
Effective April 1998, the Company completed the sale of 1,666,666 shares
of restricted common stock at a price of $.30 per share for $500,000,
less issuance costs of $9,000, to provide additional working capital. In
addition, effective December 1998, the Company finalized an agreement to
sell 3,055,556 shares of restricted common stock at a price of $.18 per
share for $550,000 consisting of $295,000 of cash proceeds and stock
subscription receivable of $255,000 to provide additional working
capital. Subsequent to December 13, 1998, all stock subscriptions
receivable were collected and the shares of common stock were issued.
6. ACQUISITION
On December 4, 1998, the Company completed the acquisition of certain
assets of Shasta Geochemistry Laboratory, Inc. ("Shasta"), an analytical
services company, principally engaged in testing for the mineral
exploration industries, in an all stock transaction, for 150,000 shares
of the Company's common stock valued at $39,000 and contingent future
consideration of additional common stock, not to exceed an additional
150,000 shares, in the event certain goals are met. The Company will
issue one additional share of its common stock for each $2.00 that total
gross revenues collected by the company from Shasta customers during the
first year after closing exceed $300,000, and during the second year
after closing exceed $600,000. The purchase price allocation is
preliminary and may change based on the resolution of these contingencies.
The assets acquired include customer lists, a noncompetition agreement
among the President of Shasta and the Company and all goodwill of Shasta.
The operations of Shasta are incorporated into the operations of the
Company's 27,000 square foot laboratory located in Reno, Nevada. The
Company has not acquired any
Page 14
<PAGE>
assets nor assumed any liabilities of Shasta other than those described
above.
The acquisition was accounted for as a purchase with the assets valued at
the fair value of the common stock issued by the Company and this value
has been allocated to customer list (50%) and noncompetition agreement
(50%) and is being amortized over 4 and 2 years, respectively.
8. SALE OF ACCOUNTS RECEIVABLE
Periodically the Company sells its accounts receivable to an independent
factoring company. Pursuant to the provisions of SFAS 125, the Company
reflects the transaction as a sale of assets less the costs of the
transaction and less any anticipated future loss in value of the retained
asset. To the extent that payments from customers exceeds the amount
received from the factoring company, the difference less fees and
expenses is refunded to the Company. As of March 31, 1999 no accounts
receivable had been factored.
9. BUSINESS SEGMENTS
In 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information". The Company reports separately
operating results in the following two principal, strategic, business
segments: Environmental analytical testing services and mineralogical and
geochemical testing activities. The Company evaluates segment performance
based on income (loss) from operations. A summary of segment information
follows (in thousands $):
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
------ ------
<S> <C> <C>
Environmental
Sales of Services $ 930 $ 954
Costs and Expenses $ 799 $ 813
Operating Profit $ 131 $ 141
Mineral
Sales of Services $ 276 $ 710
Costs and Expenses $ 661 $ 663
Operating Loss $ (385) $ 47
Corporate
Costs and Expenses $ 179 $ 320
Operating Loss $ (179) $ (320)
Consolidated
Sales of Services $ 1,206 $ 1,664
Costs and Expenses $ 1,639 $ 1,796
Operating Loss $ (433) $ (132)
</TABLE>
Page 15
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and related notes included elsewhere
herein. The Company's future operating results may be affected by
various trends and factors which are beyond the Company's control. These
include, among other factors, the competitive environment in which the
Company operates, future capital needs, uncertainty of government
contracts, uncertainties in revenue due to fluctuations in weather, and
other uncertain business conditions that affect the Company's businesses.
With the exception of historical information, the matters discussed below
under the headings "Results of Operations" and "Capital Resources and
Liquidity" may include forward-looking statements that involve risks and
uncertainties. The Company cautions readers that a number of important
factors discussed herein, and in other reports filed with the Securities
and Exchange Commission, particularly the Company's Form 10-KSB for the
year ended December 31, 1998, could affect the Company's actual results
and cause actual results to differ materially from those in the forward
looking statements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
Sales of services on a combined basis of the environmental and mineral
businesses, for the three months ended March 31, 1999 of $1,206,000 are
72% of prior year first quarter sales of $1,664,000. Environmental
Division 1998 first quarter sales of $930,000 are lower than first
quarter 1998 sales of $954,000 by $24,000. Mineral Division 1999 first
quarter sales of $276,000 are down 62% or $440,000 as compared to first
quarter 1998 sales of $710,000.
Radiochemistry laboratory sales of $535,000 for the first quarter of 1999
represent a decrease of 14% as compared to the same period in 1998. Inorganic
and organic laboratory first quarter sales of $229,000 and $162,000,
respectively, are up versus the same period of last year by 5% and 55%,
respectively. First
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quarter 1999 radiochemistry sales are being compared to a strong first
quarter in 1998 which was favorably impacted by large one-time carryover work
from 1997. In 1999 there are no such large one-time contracts. The Company
continues to focus its' attention on the low level radiation testing market.
Page 17
<PAGE>
Mineral Division sales fell by $440,000 or 62% in the first quarter of 1999
versus the first quarter of 1998. The reasons for the decrease continued to
be those from the second half of 1998. They are mainly the reduction in
mineral exploration work brought about by low gold and other metal prices and
the downturn in investment by junior mining companies. In addition a single
customer exploration program in Central America continued to be dramatically
reduced.
Gross profit of $8,000 for the three months ended March 31, 1999 is $385,000
and 32% (points) lower than the first quarter of 1998. The gross profit
deterioration is totally attributable to the Mineral Division which
experienced gross profit losses in the first quarter of 1999 as compared to
20% gross margin on sales in the first quarter of 1998. The margin reduction
can be traced to lower sales volume with relatively level fixed costs.
Start-up and incremental fixed costs associated with the facilities in
Mexico, Central America and South America continue to exacerbate the
situation. The gross margin losses of the Mineral Division are offset by
gross profit and gross margin (5%) points improvement in the Environmental
Division.
Selling, general and administrative expenses in the first quarter of 1999 are
$84,000 lower than the first quarter of 1998 principally due to professional
fees related to the investigation as discussed further under "Capital
Resources and Liquidity".
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
Cash and cash equivalents of $36,000 at March 31, 1999 decreased by $137,000
from $173,000 at December 31, 1998. Operations used cash of $345,000 for the
three months ended March 31, 1999, primarily due to the losses for the period
and partially offset by a decrease in net operating assets of $35,000.
Financing activities generated net cash of $231,000 for the three months
ended March 31, 1999 principally from the collection of the subscription
receivable from the sale of common stock in December 1998.
The Company's operating plan for the next year will concentrate on rebuilding
sales in the Mineral Division which suffered a steep decline during 1998,
largely due to the depressed level of worldwide mineral exploration activity.
Management estimates that the Company's operating activities, plus the
necessary investments to rebuild Mineral Division sales, will require
additional funding of approximately $500,000 in 1999.
The Company is addressing this funding requirement in several ways. A
$150,000 Certificate of Deposit currently pledged to the Colorado Department
of Health in order to meet an environmental regulatory requirement relating
to laboratories involved in radiochemistry activities has been released and
replaced with a Financial Guarantee Bond in May 1999. The Company is also in
the process of negotiating a line of credit backed by the Company's accounts
receivable with a number of financial institutions. The Company has also
established a relationship with a company engaged in the factoring of
accounts receivable and is utilizing this relationship to meet its short term
cash requirements pending the outcome of the negotiations to secure a line of
credit.
There can be no assurance that the Company will not require additional
financial resources to enable it to meet its obligations in the future or
that any future funds required will be generated from operations or from the
aforementioned or other potential sources. The lack of additional capital
could force the Company to substantially curtail operations and/or capital
replacements and could therefore have a material adverse effect on the
Company's business.
Page 19
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY (CONTINUED)
In early 1998, the Company learned that certain employees in one section of
its environmental laboratory did not consistently follow laboratory
procedures as set forth in the Company's Standard Operating Procedures and
applicable test methods. Management believes the employee practices in
question may have affected a small percentage of the soil and water test
results reported to clients of the environmental laboratory. The Company
commenced an internal investigation, engaged outside advisors to assist in
the investigation, and initiated a broad program of corrective actions. In
addition, the Company informed the United States Environmental Protection
Agency ("EPA") of its investigation and its corrective action program.
EPA representatives conducted an investigation into this matter in accordance
with Agency policy towards voluntary disclosures of this type, and the
Company cooperated fully in that process. To date, no agency or other party
has brought any action or proceeding against the Company.
By letters dated December 24, 1998, and March 19, 1999, the EPA has informed
the Company that it does not intend to take any civil or criminal enforcement
action against the Company as a result of the matters reported by the
Company. Management believes that the EPA investigation into this matter has
concluded.
Effective April 1998, the Company completed the sale of 1,666,666 shares of
restricted common stock at a price of $.30 per share for $500,000, less
issuance costs of $9,000, to provide additional working capital. In
addition, effective December 1998, the Company finalized an agreement to sell
3,055,556 shares of restricted common stock at a price of $.18 per share for
$550,000 consisting of $295,000 of cash proceeds and a stock subscription
receivable of $255,000 to provide additional working capital. Subsequent to
December 13, 1998, all stock subscriptions receivable were collected and the
shares of common stock were issued.
Page 20
<PAGE>
INCOME TAXES AND NET OPERATING LOSS CARRYFORWARDS
At March 31, 1999, the Company has approximately $15,000 of alternative
minimum tax credits and unused net operating loss carryforwards of
approximately $4,611,000. The alternative minimum tax credits have no
expiration date and the loss carryforwards expire in varying amounts from
1999 to 2018 and are subject to certain limitations under Section 382 of the
Internal Revenue Code ("IRC") of 1986 as amended.
Page 21
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
INFLATION
Inflation was not a material factor in either the sales or the operating
expenses of the Company even though Mexico is considered a highly
inflationary economy as discussed in notes to the accompanying consolidated
financial statements.
YEAR 2000
The Company is aware of the issues associated with the programming code in
its existing instruments and computer systems as the year 2000 approaches.
The issue is whether these systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize date sensitive information could generate erroneous data or cause a
system to fail.
The Company is in the process of replacing its two major computer-ized
information systems - accounting system and laboratory information management
system ("LIMS") - with systems certified as year 2000 compliant by their
respective manufacturers. In addition, the Company is either replacing
instruments or installing new software in instruments that are not year 2000
compliant. The two computerized information systems cost approximately
$100,000 and have been financed with capital leases. The cost to remedy the
instrumentation issues is expected to be less than $50,000. Management
believes that costs associated with remediation, if necessary, of fax
machines, telephones, security systems, etc will not be material. The
Company has not developed contingency plans that would assure it will not be
adversely impacted by the effect of the Year 2000 Issue and doe not intend to
prepare such plans. Actual results could differ materially from the above
estimates concerning year 2000 issues.
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<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. Information to be included herein is in Note 4 to
the Consolidated Financial Statements hereof.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. Information to be
included herein is in Note 5 to the Consolidated Financial Statements.
Item 3. DEFAULTS UPON SENIOR SECURITIES. None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER. None.
Item 5. OTHER INFORMATION. None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K. None.
Exhibit 27, Financial Data Schedule
Page 23
<PAGE>
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 LABORATORIES, INC.
----------------------------
(REGISTRANT)
Date: May 14, 1999 By: /s/ J. Graham Russell
------------------------ -------------------------
Graham Russell
President and C.E.O.
Page 24
<PAGE>
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 LABORATORIES, INC.
----------------------------
(REGISTRANT)
Date: May 14, 1999 By: /s/ J. Graham Russell
------------------------ -------------------------
Graham Russell
President and C.E.O.
Page 25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 36,000
<SECURITIES> 0
<RECEIVABLES> 960,000
<ALLOWANCES> 40,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,358,000
<PP&E> 3,316,000
<DEPRECIATION> (3,024,000)
<TOTAL-ASSETS> 1,901,000
<CURRENT-LIABILITIES> 952,000
<BONDS> 0
0
0
<COMMON> 66,000
<OTHER-SE> 834,000
<TOTAL-LIABILITY-AND-EQUITY> 1,901,000
<SALES> 1,206,000
<TOTAL-REVENUES> 1,206,000
<CGS> 1,198,000
<TOTAL-COSTS> 1,639,000
<OTHER-EXPENSES> 7,000
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> (446,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,000)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
