<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 4, 1998
------------------------------------------------------------------
BARRINGER LABORATORIES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
--------
(State or other jurisdiction of incorporation)
0-8241 84-0951626
---------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
15000 West 6th Avenue, Suite 300, Golden, CO 80401-5047
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303/277-1687
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
BARRINGER LABORATORIES, INC.
EXPLANATORY NOTE
Pursuant to Items 7(a)(4) and 7(b)(2) of the Securities and Exchange
Commission's (the "Commission") General Instructions for Form 8-K, Barringer
Laboratories, Inc. (the "Company") hereby amends Items 7(a) and 7(b) of its
Current Report on Form 8-K, filed with the Commission on December 17, 1998 (the
"Form 8-K"), to add financial statements of Shasta Geochemistry Laboratory, Inc.
("Shasta") and pro forma financial information for the Company reflecting the
acquisition of Shasta. The Company completed the acquisition of Shasta on
December 4, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
ITEM 7(a). FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Filed herewith as part of this report are the following financial
statements for Shasta Geochemistry Laboratory, Inc. (i) Report of Independent
Certified Public Accountants (ii) Balance Sheets as of June 30, 1998 and
September 30, 1998 (unaudited), and (iii) Statements of Operations for the year
ended June 30, 1998 and the nine months ended September 30, 1998 and 1997
(unaudited).
ITEM 7(b). PRO FORMA FINANCIAL INFORMATION
Filed herewith as a part of this report are Barringer Laboratories,
Inc. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September
30, 1998 and Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the year ended December 31, 1997 and the nine months ended September 30,
1998.
ITEM 7(c). EXHIBITS
Asset Purchase Agreement dated November 24, 1998 by and among Shasta
Geochemistry Laboratory, Inc. and Barringer Laboratories, Inc., completed on
December 4, 1998 has previously been filed.
<PAGE>
BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Barringer Laboratories, Inc. (Company) entered into an Asset
Purchase Agreement dated November 24, 1998 (Agreement) with Shasta
Geochemistry Laboratory, Inc. (Shasta). On December 4, 1998, the Company
completed the acquisition of certain assets of Shasta in an all stock
transaction, for 150,000 shares of the Company's common stock and contingent
future consideration of additional common stock, not to exceed an additional
150,000 shares, in the event certain sales goals are met. The Company will
issue one additional share of 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 assets acquired include customer lists, a noncompetition
agreement among the President of Shasta, Shasta and the Company, all goodwill
of Shasta, and unlimited access by the Company to Shasta's books and records.
In an agreement separate from the Asset Purchase Agreement, the
Company agreed to purchase for $15,000 certain laboratory and other
equipment. The agreement provides for an initial payment of $10,000 with the
remainder payable over 4 equal monthly payments. Shasta has the right to
repurchase the laboratory and other equipment acquired from Shasta under
certain circumstances. Furthermore, it is anticipated that the Company will
reach additional supplemental agreements to purchase from Shasta additional
laboratory and other equipment and supplies totaling approximately $5,000 and
to assume laboratory instrument leases of Shasta with annual lease payments
approximating $7,000.
The Company entered into a noncompetition agreement with Charles R.
Whipple, director, officer and principal shareholder of Shasta, regarding
conduct of business in certain geographic regions for a period of two years from
the date of closing. In the event that Whipple's employment with Barringer
Laboratories, Inc. is terminated without cause during the first two years
following the closing date, the terms of the noncompetition agreement shall be
null and void.
The Company has entered into an employment agreement with Charles R
Whipple, director, officer and principal shareholder of Shasta, as Operations
Director of the Reno, NV laboratory for a period of two years at a competitive
rate of compensation with potential bonuses at the end of both year one and year
two. The contract also provides for severance compensation if the employee is
terminated without cause for a period of two years from the date of the
agreement.
The operations of Shasta will be incorporated into the operations of
the Company's 27,000 square foot laboratory located in Reno, NV. The Company has
not acquired any assets nor assumed any liabilities of Shasta other than those
described above.
The acquisition will be accounted for as a purchase with the assets
valued at the fair value of the common stock issued by the Company and this
value will be allocated to customer lists (50%) and noncompetition agreement
(50%). The fair value of the common stock was based on the average bid price
for the last five trading days on which the common stock was traded on the
NASDAQ Bulletin Board Market preceding the closing date. The weighted average
bid for the above period was .26 cents per share. As discussed above, the
Company also purchased certain equipment for $15,000.
The accompanying condensed unaudited pro forma consolidated
financial statements illustrate the effect of the acquisition ("Pro Forma")
on the Company's financial position and results of operations. The Unaudited
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1998 is
based on the historical balance sheets of the Company and Shasta as of that
date and assumes that the acquisition took place on that date. The accompanying
Unaudited Pro Forma Condensed Consolidated Statements of
<PAGE>
Operations for the year ended December 31, 1997 and for the nine months ended
September 30, 1998 are based on the historical statements of the Company and
Shasta for those periods. Shasta has a fiscal year end that ends on June 30.
Consequently, results of operations for that 12 month period were adjusted to
a December year end. The Unaudited Pro Forma Condensed Consolidated
Statements of Operations assume that the acquisition took place on January 1,
1997.
The unaudited pro forma condensed consolidated financial statements
may not be indicative of the actual results of the acquisition. In particular
the operating costs associated with the integration of the Shasta work into
the Reno laboratory were based on estimates of incremental cost to be
incurred by the Company.
The accompanying unaudited pro forma condensed consolidated
financial statements should be read in connection with the historical
financial statements of the Company.
<PAGE>
BARRINGER LABORATORIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1998
Unaudited
(in thousands)
<TABLE>
<CAPTION>
Barringer Shasta Adjustments Note Pro Forma
----------- -------- ------------- ------ -----------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash $97 $8 $ (8) 3 $97
Accounts Receivable 1,086 93 (93) 3 1,086
Prepaid Expenses and
Other Expenses 327 19 (19) 3 327
----------- -------- -------------- -----------
Total Current Assets 1,510 120 (120) 1,510
Property and Equipment, net 221 144 (129) 2,3 236
Certificate of Deposit 150 0 0 150
Other Assets 53 6 34 1,3 93
----------- -------- -------------- -----------
Total Assets $1,934 $270 $(215) $1,989
----------- -------- -------------- -----------
----------- -------- -------------- -----------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts Payable $237 $47 $ (32) 2,3 $252
Accrued Liabilities:
Payroll, Compensation
and Related Expenses 129 0 0 129
Other 281 2 (2) 3 281
Current Maturities of
Long-Term Debt 38 71 (71) 3 38
----------- -------- -------------- -----------
Total Current Liabilities 685 120 (105) 700
Long-Term Debt, Less
Current Maturities 24 56 (56) 3 24
Shareholders' Equity 1,225 94 (54) 1,3 1,265
----------- -------- -------------- -----------
Total Liabilities and
Shareholders' Equity $1,934 $270 $(215) $1,989
----------- -------- -------------- -----------
----------- -------- -------------- -----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
BARRINGER LABORATORIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Unaudited
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Barringer Shasta(4) Adjustments Note Pro Forma
----------- -------- ------------- ------ -----------
<S> <C> <C> <C> <C> <C>
Sales of Services $7,179 $1,118 $0 $8,297
Cost of Services Sold 5,526 485 82 5 6,093
----------- -------- -------------- -----------
Gross Profit 1,653 633 (82) 2,204
Selling, General and
Administrative Expenses 1,819 498 (398) 6 1,919
Corporate Realignment 131 0 0 131
----------- -------- -------------- -----------
Operating Profit (Loss) (297) 135 316 154
Other Income (Expense) (69) (20) 20 7 (69)
----------- -------- -------------- -----------
Income (Loss) Before Income
Taxes and Minority Interest
in Loss of Subsidiary (366) 115 336 85
Income Taxes (9) 0 0 0 0
Minority Interest in Loss of
Subsidiary 54 0 0 54
----------- -------- -------------- -----------
Net Income (Loss) $ (312) $115 $336 $139
----------- -------- -------------- -----------
----------- -------- -------------- -----------
Net Income (Loss) per share:
Basic $(0.20) $0.08
----------- -----------
----------- -----------
Diluted $(0.20) $0.07
----------- -----------
----------- -----------
Weighted average number
of shares outstanding:
Basic 1,591 1,741
----------- -----------
----------- -----------
Diluted 1,591 1,918 (8)
----------- -----------
----------- -----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
BARRINGER LABORATORIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
Unaudited
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Barringer Shasta Adjustments Note Pro Forma
----------- -------- ------------ ------ -----------
<S> <C> <C> <C> <C> <C>
Sales of Services $4,843 $335 $ -- $5,178
Cost of Services Sold 3,848 255 (66) 5 4,037
----------- -------- -------------- -----------
Gross Profit 995 80 66 1,141
Selling, General and
Administrative Expenses 1,817 170 (96) 6 1,891
----------- -------- -------------- -----------
Operating Profit (Loss) (822) (90) 162 (750)
Other Income (Expense) 2 (1) 1 7 2
----------- -------- -------------- -----------
Income (Loss) before Income
Taxes and Minority Interest
in Loss of Subsidiary (820) (91) 163 (748)
Income Taxes (9) 0 0 0 0
Minority Interest in Loss
of Subsidiary 6 0 0 6
----------- -------- -------------- -----------
Net Income (Loss) $ (814) $(91) $163 $(742)
----------- -------- -------------- -----------
----------- -------- -------------- -----------
Net Income (Loss)
Per Share:
Basic $(0.31) $(0.27)
----------- -----------
----------- -----------
Diluted $(0.31) $(0.27)
----------- -----------
----------- -----------
Weighted average number
of shares outstanding:
Basic 2,609 2,759
----------- -----------
----------- -----------
Diluted 2,609 (8) 2,759
----------- -----------
----------- -----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
BARRINGER LABORATORIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Unaudited
(in thousands)
NOTE A - The pro forma adjustments to the condensed consolidated balance sheet
are as follows:
(1) To reflect the acquisition of certain assets of Shasta and the allocation
of the purchase price based on the fair value of the Company's Common Stock
issued in exchange for these assets. The components of the purchase price
and allocation to assets are as follows:
<TABLE>
<S> <C>
Common stock, 150,000 shares
Issued at fair value of 26 cents per share $40
Allocation of the purchase price:
Noncompetition Agreement 20
Customer List 20
---
$ 0
---
</TABLE>
(2) To reflect the acquisition of laboratory and other equipment from Shasta
for $15 as a part of a separate agreement entered into in conjunction with
the purchase agreement.
(3) The following Shasta September 30, 1998 balances are eliminated because the
purchase agreement only included a noncompetition agreement, a customer
list and the separate agreement to purchase certain equipment for $15. No
other assets were acquired nor liabilities assumed other than those
included in the pro forma balance sheet.
<TABLE>
<CAPTION>
Eliminate Shasta Allocation of Net
Balances Purchase Price Adjustment
<S> <C> <C> <C>
Cash $( 8) $ -- $ (8)
Accounts Receivable ( 93) -- (93)
Prepaid Expenses and
Other Expenses (19) -- (19)
Property and Equipment, net (144) 15 (129)
Other Assets ( 6) 40 34
Accounts Payable (47) 15 (32)
Accrued Liabilities (2) -- (2)
Current Maturities of
Long-Term Debt (71) -- (71)
Long-Term Debt (56) -- (56)
Shareholders' Equity $ (94) $ 40 $ (54)
</TABLE>
<PAGE>
NOTE B - The pro forma adjustments to the Condensed Consolidated Statements of
Operations are as follows:
(4) The Statement of Operations of Shasta for the year ended June 30, 1998 is
adjusted to reflect the results of operations for the twelve months ended
December 31, 1997 by subtracting the unaudited results of operations for
the six months ended June 30, 1998 and adding the unaudited results of
operations for the six months ended June 30, 1997, as follows:
<TABLE>
<CAPTION>
12 Months 6 Months 6 Months 12 Months
6/30/98 6/30/98 6/30/97 12/31/97
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales of Services $631 $(179) $666 $1,118
Cost of Services Sold 409 (177) 253 485
Selling, General and
Administrative Expenses 339 (107) 266 498
----- ----- ---- ------
Operating Profit (Loss) (117) 105 147 135
Other Income (Expense) (7) (1) (12) (20)
Net Income (Loss) $(124) $ 104 $135 $ 115
----- ----- ---- ------
----- ----- ---- ------
</TABLE>
(5) Adjustments to Cost of Services Sold to reflect the cost structure of
Barringer because the Shasta laboratory was not part of the acquisition and
analytical work would be performed by Barringer:
<TABLE>
<CAPTION>
Year Ended 9 Months Ended
12/31/97 9/30/98
---------- --------------
<S> <C> <C>
Net increase (decrease) in
costs of Barringer versus
Shasta cost of services $ 78 $ (69)
Additional Depreciation 4 3
---- -----
Total $ 82 $ (66)
------- -----
------- -----
</TABLE>
(6) Adjustment to Selling, General and Administrative Expenses because all such
functions will be performed by Barringer:
<TABLE>
<S> <C> <C>
Elimination of Shasta Expense, net $(498) $(170)
Additional Administrative Salaries,
including salary under employment
agreement 85 63
Amortization of Noncompetition
Agreement (over 2 years) and
Customer list (over 4 years) 15 11
---- ----
Total $(398) $ (96)
------ ------
------ ------
</TABLE>
(7) Adjustment to Other Expense because such costs will not be incurred by
Barringer:
<TABLE>
<S> <C> <C>
Elimination of Shasta Expense $ 20 $ 1
----- ----
----- ----
</TABLE>
(8) At December 31, 1997, 177 options, and September 30, 1998, 240 options were
not included in diluted earnings per share because they were anti-dilutive
since the Company reported a net loss. However, in the unaudited pro forma
condensed consolidated statement of operations for the year ended
December 31, 1997, the Company reported pro forma net income.
Accordingly, 177 options were included in diluted earnings per share.
(9) Income taxes have not been provided in the unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 1997
and for the nine months ended September 30, 1998 because of the
availability of net operating loss carryforwards of the Company.
<PAGE>
- -------------------------------------------------------------------------------
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
----------------------------------------------------
YEAR ENDED JUNE 30, 1998
------------------------
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
YEAR ENDED JUNE 30, 1998
------------------------
TABLE OF CONTENTS
-----------------
INDEPENDENT AUDITOR'S REPORT
BALANCE SHEET- June 30 1998 and September 30, 1998 (unaudited)
STATEMENT OF OPERATIONS - Year ended June 30, 1998 and the three months
ended September 30, 1998 (unaudited) and 1997 (unaudited)
STATEMENT OF STOCKHOLDERS' EQUITY - Year ended June 30, 1998 and the three
months ended September 30, 1998 (unaudited)
STATEMENT OF CASH FLOWS - Year ended June 30, 1998 and the three months
ended September 30, 1998 (unaudited) and 1997 (unaudited)
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
February 4, 1999
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors
Shasta Geochemistry Laboratory, Inc
Redding, California
I have audited the accompanying balance sheet of Shasta Geochemistry
Laboratory, Inc., (a California corporation), as of June 30, 1998, and the
related statements of operations, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shasta Geochemistry
Laboratory, Inc., as of June 30, 1998, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Ronald Bissett, CPA
Issaquah, Washington
- -------------------------------------------------------------------------------
<PAGE>
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
BALANCE SHEET
-------------
ASSETS
------
<TABLE>
<CAPTION>
June 30 September 30
1998 1998
--------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 3,465 $ 8,214
Receivables, less allowance of $15,000 for doubtful accounts 65,856 93,277
Inventory - at cost 19,005 17,652
Prepaid expenses -- 1,258
--------------- -----------------
Total current assets 88,326 120,401
--------------- -----------------
FIXED ASSETS
Machinery, equipment and leasehold improvements 248,918 248,810
Less accumulated depreciation (95,122) (104,716)
--------------- -----------------
Total fixed assets 153,796 144,094
--------------- -----------------
OTHER ASSETS
Investments 5,712 5,712
--------------- -----------------
Total other assets 5,712 5,712
--------------- -----------------
TOTAL $ 247,834 $ 270,207
--------------- -----------------
--------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current portion of long term debt $ 26,835 $ 26,835
Note payable 45,077 43,658
Accounts payable 34,910 46,670
Taxes payable 2,328 2,458
--------------- -----------------
Total current liabilities 109,150 119,621
--------------- -----------------
LONG TERM DEBT
Notes payable 42,958 37,796
Obligations under capital lease 14,669 13,501
Note payable to stockholder 31,826 31,826
Less current portion (26,835) (26,835)
--------------- -----------------
Total long term debt 62,618 56,288
--------------- -----------------
Total liabilities 171,768 175,909
--------------- -----------------
STOCKHOLDERS' EQUITY
Common stock, no par value; 1,000 shares
authorized, issued and outstanding 500 shares 145,028 145,028
Paid in capital 27,534 32,914
Retained earnings (deficit) (96,496) (83,644)
--------------- -----------------
Total stockholders' equity 76,066 94,298
--------------- -----------------
TOTAL $ 247,834 $ 270,207
--------------- -----------------
--------------- -----------------
</TABLE>
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS
<PAGE>
SHASTA GEOCHEMISTRY LABORATORY, INC.
------------------------------------
STATEMENT OF OPERATIONS
-----------------------
<TABLE>
<CAPTION>
Three Months Ended
Year Ended September 30
June 30 ---------------------------
1998 1998 1997
-------------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
SALES OF SERVICES $ 631,390 $ 155,811 $ 242,981
COST OF SERVICES SOLD 408,969 78,100 182,439
--------------- ------------ ------------
GROSS PROFIT 222,421 77,711 60,542
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 339,403 63,177 88,145
--------------- ------------ ------------
OPERATING INCOME (LOSS) (116,982) 14,534 (27,603)
--------------- ------------ ------------
OTHER INCOME
Interest income 3,514 1,166
Interest expense (16,770) (2,848) (3,614)
Miscellaneous income 6,420
--------------- ------------ ------------
Total other income (expense) (6,836) (1,682) (3,614)
--------------- ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (123,818) 12,852 (31,217)
PROVISION FOR FEDERAL INCOME TAX 0 0 0
--------------- ------------ ------------
NET INCOME (LOSS) $ (123,818) $ 12,852 $ (31,217)
--------------- ------------ -------------
--------------- ------------ -------------
</TABLE>
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS
<PAGE>
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------
<TABLE>
<CAPTION>
NUMBER ADDITIONAL RETAINED
OF COMMON PAID IN EARNINGS
SHARES STOCK CAPITAL (DEFICIT) TOTAL
------ ----- ------- --------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1997 $ 500 $ 145,028 $ 27,534 $ 27,322 $ 199,884
------------ -------------- ------------- ------------- --------------
Net income (loss) (123,818) (123,818)
------------ -------------- ------------- ------------- --------------
BALANCE, JUNE 30, 1998 500 145,028 27,534 (96,496) 76,066
Net income (loss) (unaudited) 12,852 12,852
Additional paid in capital (unaudited) 5380 5,380
------------ -------------- ------------- ------------- --------------
BALANCE, SEPTEMBER 30, 1998
(unaudited) $ 500 $ 145,028 $ 32,914 $ (83,644) $ 94,298
------------ -------------- ------------- ------------- --------------
------------ -------------- ------------- ------------- --------------
</TABLE>
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS
<PAGE>
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
STATEMENT OF CASH FLOWS
-----------------------
<TABLE>
<CAPTION>
Three Months Ended
Year Ended September 30
June 30 --------------------------------------
1998 1998 1997
------------------- ------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (123,818) $ 12,852 $ (31,217)
Noncash expenses, revenues, losses, and gains
included in income:
Depreciation 45,625 9,702 10,239
Bad debt allowance 15,000
(Increase) decrease in accounts receivables 30,826 (27,420) (8,290)
(Increase) decrease in inventory 28,710 1,352
(Increase) decrease in prepaid expenses 1,115 (1,258) 260
Increase (decrease) in notes and accounts payable 13,210 10,341 59,986
Increase (decrease) in taxes payable (5,945) 130 4,686
------------------- ------------------ ------------------
Net cash flows from operating activities 4,723 5,699 35,664
------------------- ------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquistion of equipment (14,376) (9,596)
(Increase) decrease in deposits and other assets 2,215 (1,464)
Decrease in amounts due from affiliates 16,477 1,227
------------------- ------------------ ------------------
Net cash provided (used) by investing activities 4,316 (9,833)
------------------- ------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in long term debt (6,027) (6,330) (20,060)
(Increase) decrease in paid in capital (2,444) 5,380
------------------- ------------------ ------------------
Net cash provided (used) by financing activities (8,471) (950) (20,060)
------------------- ------------------ ------------------
NET INCREASE (DECREASE) IN CASH 568 4,749 5,771
CASH - BEGINNING OF YEAR 2,897 3,465 2,897
------------------- ------------------ ------------------
CASH - END OF YEAR $ 3,465 $ 8,214 $ 8,668
------------------- ------------------ ------------------
------------------- ------------------ ------------------
</TABLE>
SEE ACCOUNTANT'S REPORT AND NOTES TO FINANCIAL STATEMENTS
<PAGE>
- --------------------------------------------------------------------------------
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(CONTINUED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
Shasta Geochemistry Laboratory, Inc. is a California Corporation. The
Company was incorporated on June 4, 1994 and is an analytical services
company, principally engaged in analytical testing for the mineral
exploration industries. The Company currently uses the accrual method
of accounting for financial reporting and for income tax purposes.
UNAUDITED INFORMATION
The accompanying financial statements as of September 30, 1998 and for
the three months ended September 30, 1998 and 1997 are unaudited and
have been prepared on a substantially equivalent basis with that of
the annual financial statements. In the opinion of management the
unaudited information contains all adjustments (consisting only of
normal reccuring adjustments) necessary to present fairly the
Company's financial position and results of operations as of September
30, 1998 and for such periods.
FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash and trade
accounts receivable. Concentrations of credit risk with respect to
trade receivables are limited due to the large number of customers and
generally short payment terms.
The carrying amounts of financial instruments including cash, trade
accounts receivable, trade accounts payable and accrued liabilities
approximated fair value because of the immediate or short-term
maturity of these instruments. The difference between the carrying
amount and fair value of the Company's long term debt is not
significant.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(CONTINUED)
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are carried at cost. Depreciation of owned
equipment is computed on a straight-line basis over the estimated
useful lives of the related assets, generally from three to ten years.
Leasehold improvements are amortized over the term of the related
lease, generally from five to ten years. Equipment under capital
leases is amortized on a straight-line basis over the term of the
lease, generally three to five years which approximates the estimated
useful lives of leased equipment.
REVENUE RECOGNITION
Sales are recorded in the periods that services are performed.
RELATED PARTY TRANSACTIONS
The Company shares office space with Shasta Analytical Laboratory,
Inc. and has an agreement whereby certain shared expenses incurred by
the Company are charged to Shasta Analytical Laboratory, Inc. The
agreement with Shasta Analytical Laboratory, Inc. relates to the
Company's share of office, insurance, utilities and supplies.
Transactions between the Company and Shasta Analytical Laboratory,
Inc. are not purported to be at arms length. For the year ended June
30, 1998 related party transactions were $10,771 and the total balance
due from Shasta Analytical Laboratory, Inc. was $31,483
The Company also owns 255 shares of common stock of Shasta Analytical
Laboratory, Inc. purchased for $22.40 per share for a total cost of
$5712.
MACHINERY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Machinery, equipment and leasehold improvements consist of the
following:
<TABLE>
<S> <C>
Equipment and sign $ 136,390
Automobiles and trucks 95,710
Leasehold improvements 16,818
---------
248,918
Accumulated depreciation (95,122)
----------
$ 153,796
----------
----------
</TABLE>
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<PAGE>
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SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(CONTINUED)
NOTE PAYABLE
At June 30, 1998 the Company had a revolving credit line with a bank
allowing for maximum drawings of $45, 000. The line of credit is
payable on demand, bears interest at the bank's prevailing variable
rate plus 2.50 percentage points and is guaranteed by the President.
On December 8, 1998 the note was changed to a non revolving line of
credit due May 1999.
LONG TERM DEBT
At June 30, 1998, long term notes payable consisted of the following:
<TABLE>
<S> <C>
9.16% note payable to bank, secured by a vehicle, payable
in monthly installments of $594 including interest. The note
is guaranteed by the President and is due September 2000. $ 14,149
10.50% note payable to the bank secured by all inventory,
accounts and equipment, payable in monthly installments
of $816 including interest. The note is guaranteed by the
President and is due June 2000. 17,492
Note payable to bank, unsecured, payable in monthly
installments of $546 plus interest at a fluctuating interest
rate per annum equal to the bank's reference rate plus 3.625
percentage points. The note is guaranteed by the
President and is due March 2000. 11,317
--------
42,958
Current portion (21,576)
Long term debt $ 21,382
--------
--------
</TABLE>
Estimated maturities on long term debt on long term debt for the next
five years are as follows:
<TABLE>
<S> <C> <C>
Year ended: June 30, 1999 $ 21,576
June 30, 2000 $ 16,502
June 30, 2001 $ 4,880
June 30, 2002 $ 0
June 30, 2003 $ 0
</TABLE>
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<PAGE>
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SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(CONTINUED)
OBLIGATION UNDER CAPITAL LEASES
The obligation under capital leases consists of the following:
<TABLE>
<S> <C>
Obligation under capital leases $14,669
Less current maturities 5,259
-------
$ 9,410
-------
-------
</TABLE>
As of June 30, 1998, future net minimum lease payments under
capital lease obligations are as follows:
<TABLE>
<S> <C>
July 1, 1998 to June 30, 1999 $ 6,429
July 1, 1999 to June 30, 2000 6,079
July 1, 2000 to April 30, 2001 5,066
-------
Total minimum lease payments 17,574
Less amounts representing interest 2,905
-------
Present value of net minimum lease payments $14,669
-------
-------
</TABLE>
NOTE PAYABLE TO STOCKHOLDER
Note payable to stockholder consists of an unsecured note, payable in
full, with interest to be determined, within twelve months of the
Company's plan to liquidate assets.
INCOME TAXES
The Company has loss carryforwards totaling $101,731 that may be
offset against future taxable income. If not used, the carryforwards
and credits will expire as follows.
<TABLE>
<S> <C>
Year 13 $ 16,184
Year 15 $ 85,547
</TABLE>
LEASE COMMITMENT
The Company leases office and warehouse space under a short term lease
arrangement. This lease is classified as an operating lease and
expires and renews on a monthly basis. Since the lease term does not
exceed one year, no future minimum lease payments are disclosed.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHASTA GEOCHEMISTRY LABORATORY, INC
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(CONTINUED)
SUBSEQUENT EVENTS
On December 4, 1998 the Company's stockholders agreed to sell certain
assets of the Company to an international analytical services company
in exchange for common stock of that company. Assets sold included
customer lists and goodwill. In addition, the Company has agreed to
lease or sell certain laboratory equipment as requested by the
purchaser.
The agreement also requires a noncompetition agreement between the
Company, the President and the purchaser.
The President of the Company has entered into an employment agreement
with the purchaser for a period of two years starting on December 4,
1998.
The Company's directors and stockholders have not yet determined the
future course of the Company.
- --------------------------------------------------------------------------------
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this amended report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: February 17, 1999
BARRINGER LABORATORIES, INC.
By: /s/ J. Graham Russell
--------------------------------
J. Graham Russell, President
