BARRINGER LABORATORIES INC
10QSB, 2000-06-13
TESTING LABORATORIES
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                       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, 2000                                               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
                                                 ----------------




Number of shares  outstanding  as of June 13, 2000 - 16,803,180 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, 2000 (Unaudited) and
               December 31, 1999

          -    Consolidated  Statements of Operations  (Unaudited) for the Three
               Months Ended March 31, 2000 and 1999;

          -    Consolidated  Statements of Cash Flows  (Unaudited) for the Three
               Months Ended March 31, 2000 and 1999;

          -    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>

<TABLE>
<CAPTION>


                          BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED BALANCE SHEETS

                                                                 March 31,                   December 31,
                                                                   2000                          1999
                                                                 ---------                   -----------

                                                                (Unaudited)

<S>                                                              <C>                          <C>
Assets

Current Assets:
  Cash and cash equivalents .................................    $   13,000                   $   92,000
  Trade receivables, less
    allowance of $118,000 and
    $116,000 for doubtful accounts ..........................       451,000                      705,000
  Prepaid expenses and other ................................        79,000                       92,000
                                                                 ----------                   ----------
      Total Current Assets ..................................       543,000                      889,000
                                                                 ----------                   ----------

Property and Equipment:
  Machinery and equipment ...................................     1,376,000                    1,375,000
  Machinery and equipment under
    capital lease obligations ...............................       234,000                      234,000
  Leasehold improvements ....................................       519,000                      519,000
  Office furniture and equipment ............................        60,000                       59,000
                                                                 ----------                   ----------
                                                                  2,189,000                    2,187,000

  Less accumulated depreciation
    and amortization ........................................     2,091,000                    2,054,000
                                                                 ----------                   ----------

      Net Property and Equipment ............................        98,000                      133,000
                                                                 ----------                   ----------

Other Assets ................................................        34,000                       34,000
                                                                 ----------                   ----------

Total Assets ................................................    $  675,000                   $1,056,000
                                                                 ==========                   ==========
















See accompanying notes to consolidated financial statements.



                                     Page 3
<PAGE>


<CAPTION>

                          BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED BALANCE SHEETS

                                                                 March 31,          December 31,
                                                                   2000                 1999
                                                                 --------           ------------

                                                               (Unaudited)

<S>                                                           <C>                 <C>
Liabilities and Shareholders' Deficit

Current Liabilities:
  Line of Credit .....................................        $   285,000         $   267,000
  Subordinated convertible notes
    payable ..........................................            589,000             373,000
  Trade accounts payable .............................            433,000             562,000
  Accrued liabilities:
    Payroll, compensation and
      related expenses ...............................            135,000             178,000
    Accrued property tax .............................             37,000              38,000
    Other ............................................            250,000             342,000
  Current maturities of obligations
    under capital leases .............................             41,000              41,000
  Net liabilities of discontinued
    operations .......................................            502,000             627,000
                                                              -----------         -----------

    Total Current Liabilities ........................          2,272,000           2,428,000

Obligations under capital leases,
  less current maturities ............................             18,000              31,000
                                                              -----------         -----------

    Total Liabilities ................................          2,290,000           2,459,000
                                                              -----------         -----------

Shareholders' Deficit:
  Preferred stock, $2.00 par value,
    1,000,000 shares authorized;
    none issued ......................................               --                  --
  Common stock, $0.01 par value,
    shares authorized, 50,000,000;
    issued and outstanding 6,803,180
    and 6,708,982 ....................................             68,000              68,000
  Treasury stock, at cost ............................             (5,000)             (5,000)
  Additional paid-in capital .........................          4,007,000           3,752,000
  Accumulated deficit ................................         (5,685,000)         (5,218,000)
                                                              -----------         -----------

    Total Shareholders' Deficit ......................         (1,615,000)         (1,403,000)
                                                              -----------         -----------

Total Liabilities and
  Shareholders' Deficit ..............................        $   675,000         $ 1,056,000
                                                              ===========         ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                     Page 4
<PAGE>

<TABLE>
<CAPTION>

                          BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (UNAUDITED)

                                                                 Three Months Ended March 31
                                                                 ---------------------------
                                                                   2000               1999
                                                                   ----               ----

<S>                                                            <C>               <C>
Sales of Services ........................................     $   793,000       $   930,000

Cost of Services Sold ....................................         751,000           642,000
                                                               -----------       -----------

Gross Profit .............................................          42,000           288,000

Selling, General and
 Administrative Expenses, (Including
 non-cash compensation of $25,000
 and $0, respectively) ...................................         273,000           335,000
                                                               -----------       -----------

Operating Loss ...........................................        (231,000)          (47,000)

Other Income (Expense):
   Interest income .......................................          --                 1,000
   Interest expense ......................................         (21,000)           (8,000)
   Non-cash interest expense .............................        (215,000)            --
                                                               -----------       -----------

Total Other Income (Expense) .............................        (236,000)           (7,000)
                                                               -----------       -----------

Loss from Continuing Operations ..........................        (467,000)          (54,000)

Loss from discontinued operations
 of mineralogical and geochemical
 testing business segment ................................          --              (392,000)
                                                               -----------       -----------

Net Loss .................................................     $  (467,000)      $  (446,000)
                                                               ===========       ===========









See accompanying notes to consolidated financial statements.





                                     Page 5
<PAGE>


<CAPTION>

                          BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (UNAUDITED)

                                                                 Three Months Ended March 31
                                                                 ---------------------------
                                                                   2000               1999
                                                                   ----               ----

<S>                                                            <C>               <C>

Per Share Data:

  Net Loss per share
    Basic and Diluted:
         Loss from Continuing
        Operations .......................................     $      (.07)      $      (.01)

     Loss from Discontinued
        Operations .......................................           --                 (.06)
                                                               -----------       -----------

     Net Loss ............................................     $      (.07)      $      (.07)
                                                               ===========       ===========

Weighted average common shares Outstanding:

    Basic and Diluted ....................................       6,764,310         6,562,871
                                                               ===========       ===========

</TABLE>





















See accompanying notes to consolidated financial statements.






                                     Page 6

<PAGE>

<TABLE>
<CAPTION>

                                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                                   (UNAUDITED)

                                                                              Three Months Ended March 31
                                                                             ------------------------------
                                                                             2000                      1999
                                                                             ----                      ----
<S>                                                                       <C>                        <C>
Cash Flows From Operating Activities

Net loss ...........................................................      $(467,000)                 $(446,000)
Items not affecting cash
  Non-cash compensation and interest
    expense ........................................................        240,000                       --
  Depreciation and amortization
    expense ........................................................         37,000                     33,000
  Bad debt expense .................................................          3,000                      7,000
  Other ............................................................          8,000                    (19,000)
  Increase (decrease) in operating
    Assets net of operating liabilities ............................       (119,000)                    58,000
                                                                          ---------                  ---------

  Cash Used In Operating Activities ................................       (298,000)                  (367,000)
                                                                          ---------                  ---------

Cash Flows Used In Investing Activities

Purchase of property and
  equipment ........................................................         (2,000)                    (1,000)
                                                                          ---------                  ---------


Cash Flows From Financing Activities

Borrowing under line of credit .....................................         18,000                       --
Proceeds from issuing convertible
  Notes payable ....................................................        216,000                       --
Proceeds from sale of common stock .................................           --                      255,000
Payments of capital lease obligations ..............................        (13,000)                   (24,000)
                                                                          ---------                  ---------

Cash Provided by Financing Activities ..............................        221,000                    231,000
                                                                          ---------                  ---------

Decrease in cash ...................................................        (79,000)                  (137,000)

Cash and cash equivalents
  - beginning of period ............................................         92,000                    173,000
                                                                          ---------                  ---------

Cash and cash equivalents
  - end of period ..................................................      $  13,000                  $  36,000
                                                                          =========                  =========




See accompanying notes to consolidated financial statements.


                                     Page 7
<PAGE>


<CAPTION>

                                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                                   (UNAUDITED)
                                                   (Continued)

                                                                              Three Months Ended March 31
                                                                             ------------------------------
                                                                             2000                      1999
                                                                             ----                      ----
<S>                                                                       <C>                        <C>
Decrease (increase) in
  operating assets net of
  operating liabilities

  Trade receivables ................................................      $ 253,000                  $ (87,000)
  Other current assets .............................................         13,000                   (138,000)
  Accounts payable and
    accrued liabilities ............................................       (260,000)                   (13,000)
  Net liabilities of discontinued
    operations .....................................................       (125,000)                   296,000
                                                                          ---------                  ---------

Total, net .........................................................      $(119,000)                 $  58,000
                                                                          =========                  =========


Cash paid during the
  period for interest ..............................................      $  21,000                  $   8,000
                                                                          =========                  =========


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

                                   (Unaudited)

1.   Basis of Presentation

     The  consolidated  interim  financial  statements  include the  accounts of
     Barringer Laboratories,  Inc. and its subsidiaries,  and have been prepared
     by the Company without audit,  pursuant to the rules and regulations of the
     Securities  and  Exchange  Commission.  Certain  information  and  footnote
     disclosures normally included in consolidated financial statements prepared
     in accordance  with  generally  accepted  accounting  principles  have been
     condensed or omitted pursuant to such rules and  regulations,  although the
     Company  believes that the disclosures are adequate to make the information
     presented not misleading.

     These  statements  reflect all adjustments  consisting of normal  recurring
     adjustments,  which in the opinion of  management,  are necessary for their
     presentation of the information contained herein.

     The accounting  policies followed by the Company are set forth in the Notes
     to  Consolidated   Financial  Statements  in  the  1999  audited  financial
     statements of Barringer Laboratories, Inc. and subsidiaries included in its
     Annual Report on Form 10-KSB for the year ended December 31, 1999.

     The Form 10-KSB should be read in conjunction  herewith.  The  consolidated
     financial  statements  of the Company for the three  months ended March 31,
     1999  have  been  restated  to give  retroactive  affect  to the  Company's
     discontinued operations (see Note 8).

2.   Management's Plan

     The Company's  operating plan for 1999 focused on revitalizing  its Mineral
     Division, which had suffered a steep decline in revenue during 1998, due to
     the depressed level of worldwide mineral exploration  activity.  Conditions
     in this  market  continued  to  deteriorate  during  1999  and the  Company
     determined to exit this business (see Note 8).

     The Company  entered into an agency  agreement with  Inspectorate  Griffith
     USA, Inc. (Inspectorate) effective October 15, 1999. Under the terms of the
     agreement,  the Company  transferred all of its domestic and  international
     mineral testing customer contracts, while retaining existing trade accounts
     receivable,  to Inspectorate  along with the right to use the Licensed Mark
     for promotional marketing and sales activity. In consideration, the Company
     is entitled to a  commission of 2 1/2% of payments received by Inspectorate



                                     Page 9
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     pursuant to the  contracts for a period of three years.  No commission  has
     been  recorded or received  from  Inspectorate  as of December  31, 1999 or
     March  31,  2000.  In  addition,  Inspectorate  has  hired  certain  of the
     Company's employees and acquired certain fixed assets at fair market value.
     The Company has recorded a loss as of December 31, 1999 on disposal of this
     segment of  $1,086,000,  which  includes  all  foreign  investments  and an
     immaterial minority interest.

     The  Company's  intent is to focus on the  environmental  testing  services
     business.

     As of March 31, 2000, the Company had a net working  capital  deficiency of
     $1,729,000. This net working capital deficiency resulted principally from a
     net loss of  $2,795,000  and  $467,000  (including  depreciation  and other
     non-cash  charges)  for the year ended  December  31,  1999 and the quarter
     ended  March 31,  2000,  respectively.  Also  contributing  to the  working
     capital  deficiency  was  the  line of  credit  of  $285,000,  subordinated
     convertible  notes payable of $589,000,  net  liabilities  of  discontinued
     operations of $502,000 and trade accounts  payable and accrued  expenses of
     $850,000.

     The Company's  current cash  requirements to sustain its operations for the
     year 2000 are estimated to be approximately  $600,000.  The Company expects
     that these requirements will be provided by a combination of cash generated
     from  operations,  cash provided by the Company's line of credit based upon
     eligible domestic accounts receivable, and cash from short-term debt and/or
     equity financings with existing shareholders.

     To address  its  funding  requirements,  the Company has sold shares of its
     common stock and has issued  convertible  notes. From January through March
     31, 2000 the Company issued $216,000 of subordinated convertible notes. All
     convertible subordinated notes outstanding totaling $600,000 were converted
     into  10,000,000  shares  of  common  stock  in  April  2000.  The  Company
     recognized $215,000 of compensatory non-cash interest expense in connection
     with the sale of the notes, as the notes were  convertible at a discount to
     market into common  stock.  During April 2000,  an  additional  $100,000 of
     subordinated  convertible notes were sold to certain existing  stockholders
     and management under on the same terms and conditions.

     There can be no assurance  that any funds  required  during the next twelve
     months or thereafter can be generated from  operations or, if such required
     funds are not  internally  generated,  that  funds will be  available  from


                                    Page 10
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     external  sources  such as debt or  equity  financings  or other  potential
     sources.  The  lack of  additional  capital  could  force  the  Company  to
     substantially  curtail or cease  operations  and would,  therefore,  have a
     material adverse effect on its business. Further, there can be no assurance
     that any such required funds, if available, will be available on attractive
     terms or that they  will not have a  significantly  dilutive  effect on the
     Company's existing shareholders.

3.   Accounting Policies

     Principles of Consolidation

     The accompanying consolidated financial statements comprise the accounts of
     the  Company,  its  wholly-owned   Mexican  subsidiary,   its  wholly-owned
     Nicaraguan subsidiary,  and its 67% owned Peruvian subsidiary. All accounts
     of  the  subsidiaries  are  a  part  of  the  discontinued  operations  and
     intercompany   balances   and   transactions   have  been   eliminated   in
     consolidation.  In connection with its discontinued operations, in 1999 the
     Company  wrote  off  the  immaterial  minority  interest  in  its  Peruvian
     operations.

     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. In loss periods,  dilutive common equivalent shares are excluded as
     the effect would be anti-dilutive.

     For the three months ended March 31, 2000 and 1999,  dilutive  common share
     equivalents of 212,000 and 191,600 were not included in the  computation of
     diluted per share data because their effect was antidilutive. For the three
     months ended March 31, 2000, debt convertible into 10,000,000 common shares
     was not included in the  computation  of diluted loss per share because its
     effect was anti-dilutive.

4.   Income Taxes and Net Operating Loss Carryforwards

     At March 31,  2000,  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



                                    Page 11
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     of approximately  $6,300,000.  Such net operating loss carryforwards expire
     in varying amounts from 2000 to 2020 and are subject to certain limitations
     under Section 382 of the Internal Revenue Code ("IRC") of 1986 as amended.

     As of March 31, 2000 a valuation allowance has been recorded, as management
     of the  Company is not able to  determine  that it is more  likely than not
     that the deferred tax asset will be realized.

5.   Purchase of Treasury Stock

     During  November  1999, the Company  purchased  27,777 shares of its common
     stock from a former employee for $5,000. The shares of stock were cancelled
     in April 2000.

6.   Subordinated Convertible Notes Payable

     During  January   through  March  2000,  the  Company  issued  $216,000  of
     subordinated,  convertible  notes  pursuant to  subscription  agreements to
     certain  existing  stockholders.  Such notes are convertible into shares of
     the Company's common stock at $.06 per share. Such  stockholders  include a
     major  stockholder  who  purchased  notes  of  $86,000  and  the  Company's
     President who purchased  notes of $8,000.  The notes,  which are secured by
     substantially all of the Company's assets,  are subordinated to the line of
     credit  and are due two  years  from the date of  issuance.  The  notes are
     non-interest  bearing.  The Company recorded  $215,000 in non-cash interest
     expense in connection with the beneficial  conversion feature of the notes.
     Additional  subordinated  convertible notes totaling $11,000 were issued in
     April  2000,  convertible  into  common  stock  under  the same  terms  and
     conditions.  In April  2000,  the  $600,000  in notes were  converted  into
     10,000,000 shares of common stock.

     During April and May 2000, $100,000 of additional subordinated  convertible
     notes were issued,  which are convertible  into 1,666,666  shares of common
     stock at $.06 per share.  The Company will  recognize  $100,000 of non-cash
     interest  expense  in  connection  with  the  sale  of  the  notes,  as the
     conversion  of the notes to common  stock was at a price below market value
     at the date of issuance.

7.   Line of Credit

     On May 25, 1999,  the Company  entered  into a General  Credit and Security
     Agreement with Spectrum Commercial  Services,  a division of Lyon Financial
     Services, Inc. ("Spectrum").


                                    Page 12
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Under the Credit Agreement,  Spectrum agreed to provide a revolving line of
     credit,  secured by essentially  all of the Company's  assets.  The Company
     assigned  substantially all collections on its domestic,  and some foreign,
     accounts receivable to Spectrum.

     The Note is due on May 24, 2001, or earlier upon demand.  The maturity date
     of the line of credit may be extended after May 24, 2001 by the Company for
     successive   twelve  month  periods.   Spectrum,   upon  certain  specified
     conditions,   including  the  demand  feature,  may  terminate  the  Credit
     Agreement before the maturity date. However,  the Credit Agreement provides
     that if the Company  terminates  the Credit  Agreement  before the maturity
     date,  it will be liable for a prepayment  charge equal to $3,800 times the
     number of months until the maturity date.

     The maximum  amount which Spectrum will advance at any given time is jequal
     to the lesser of:

          -    a borrowing base equal to 80% of the Company's  eligible accounts
               receivable, as defined in the agreement, or
          -    a maximum principal amount of $750,000.

     In addition, Spectrum, in its sole discretion, may decrease or increase the
     borrowing base percentage below or above the 80% described above.

     Advances  under the line of credit bear  interest at the prime lending rate
     (8.5% as of March 31, 2000) as defined in the agreement, plus 5.35%.

     Provisions  of the credit  agreement  indicate  that,  if the Company meets
     required profit levels, as defined in the agreement, the interest rate will
     be reduced to prime plus 4.35%. However, in no event will the interest rate
     be less than 10% per year, and the interest payable for each calendar month
     will be a minimum  of $3,800,  regardless  of the  amounts  which have been
     advanced. The profit levels were not met in 1999 or 2000.

     The Company is obligated under the Credit  Agreement for an  administration
     fee of $2,000 per  calendar  quarter  and annual  life  maintenance  fee of
     $15,000.

     The  Credit  Agreement  also  includes  various  affirmative  and  negative
     covenants,  which the Company must meet. The affirmative  covenants include
     the  requirement  that the Company  maintain  nominal  profit levels before
     income  taxes or that  restrict  the net losses that the Company may incur.
     The negative  covenants prohibit or restrict,  without Spectrum's  consent,
     such   items   as    expenditures    for   fixed   assets,    indebtedness,



                                    Page 13
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     recapitalizations,  mergers,  entry  into new lines of  business,  employee
     compensation and substantial  changes in the present ownership,  management
     or business of the Company and require  submission of Form 10-KSB within 90
     days of year-end. At December 31, 1999, the Company did not comply with the
     nominal profit and financial  statement  covenants and received  waivers of
     the  defaults.  Additionally,  Spectrum  consented to certain  transactions
     prohibited by the  agreement,  including the issuance of the  subordinated,
     convertible notes payable and the repurchase of a stockholders  shares. The
     Company is in  compliance  will all  covenants as of March 31, 2000.  As of
     March 31, 2000, $285,715 is outstanding under this agreement.

8.   Discontinued Operations

     Effective September 30, 1999, the Company disposed of its mineralogical and
     geochemical  testing business segment.  Accordingly,  this segment has been
     presented as a  discontinued  operation  as of the year ended  December 31,
     1999 and for the three months ended March 31, 2000 and March 31, 1999.

     Revenues from the  mineralogical  and geochemical  testing business segment
     for the three months ended March 31, 1999 were  $275,000.  No revenues were
     earned for the three months ended March 31, 2000.

     For the three months ended March 31,  1999,  the Company  recognized a loss
     from the discontinued operation of approximately $392,000.

     In connection with the discontinued business segment, effective October 15,
     1999,  the  Company  entered  into an agency  agreement  with  Inspectorate
     Griffith USA, Inc. ("Inspectorate").  Under the terms of the agreement, the
     Company  transferred all of its mineral testing domestic and  international
     customer contracts,  while retaining existing trade accounts receivable, to
     Inspectorate  along with the right to use the Licensed Mark for promotional
     marketing and sales activity. In consideration,  the Company is entitled to
     a commission of 2 1/2% of the payments received by Inspectorate pursuant to
     the contracts for a period of three years.  No commission has been recorded
     or  received  from   Inspectorate  as  of  March  31,  2000.  In  addition,
     Inspectorate has hired certain of the Company's  employees and has acquired
     certain fixed assets at fair market value.



                                    Page 14
<PAGE>



                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     At  March  31,  2000  and  December  31,  1999,  net   liabilities  of  the
     discontinued  business  segment,  retained  by the  Company  following  the
     transfer to Inspectorate, consisted of the following:

                                              March 31    December 31
                                                2000         1999
                                             ---------    -----------
                                            (Unaudited)
         Assets:
              Trade receivables, net        $  25,000    $  69,000
              Prepaid expenses and other       22,000       29,000
              Property and equipment, net        --         21,000
              Other assets                      7,000       26,000
                                            ---------    ---------

            Total Assets                       54,000      145,000
                                            ---------    ---------

            Liabilities:
              Trade accounts payable           89,000      186,000
              Accrued liabilities             467,000      586,000
                                            ---------    ---------

            Total Liabilities                 556,000      772,000
                                            ---------    ---------

            Net Liabilities of
              Discontinued Operations       $(502,000)   $(627,000)
                                            =========    =========












                                    Page 15
<PAGE>



                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITIONS 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, 1999,
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, 2000

Sales of services of the  environmental  business,  for the three  months  ended
March  31,  2000 of  $793,000  were 85% of prior  year  first  quarter  sales of
$930,000.

The following  table shows the breakdown of business by type of analytical  work
for the first quarter of 2000 as compared to the first quarter of 1999 ($000).

Type of Work                         2000        1999      Increase / (Decrease)
------------                         ----        ----      --------------------

Radiochemistry                      $ 495       $ 535       ($ 40)       (7)%
Inorganics                          $ 115       $ 233       ($118)      (51)%
Organics                            $ 183       $ 162       $  21        13 %

Total                               $ 793       $ 930       ($137)      (15)%

Radiochemistry  laboratory  sales of $495,000 for the first quarter of 2000 were
down 7% or $40,000 from the first quarter of 1999.  The decrease was due to weak
January  business in 2000. New business picked up  substantially in February and
March as  compared to 1999.  The  decline in  inorganics  work  continues  to be
largely  attributable  to the  ongoing  decline  in the  work  volume  from  the
Company's  second largest  customer,  a former uranium mining company whose site
clean-up work has been  declining  gradually for several years and will do so in
the  future.  Organics  work  volume is up over 1999 as a result of a  marketing



<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS


program  designed to take advantage of the surplus  instrument  capacity in that
laboratory.  The  Company  continues  to focus  its  attention  on the low level
radiation testing market.

New  business  for the first  quarter of 2000 of $748,000  was  $151,000 and 20%
higher as compared to the first quarter of 1999.

Gross  profit of $42,000 for the three  months  ended March 31, 2000 is $246,000
and 85%  (points)  lower  than the  first  quarter  of 1999.  The  gross  profit
deterioration  was  caused  by the lower  sales  volume  and by higher  costs of
services sold.  The higher costs were due to higher labor and personnel  related
costs plus higher supply costs.

Selling,  general and administrative  expenses in the first quarter of 2000 were
$62,000  lower than the first  quarter of 1999  principally  due to salaries and
personnel related costs.

Other income and expense for the first  quarter of 2000 is $229,000  higher than
the first  quarter of 1999.  The  increase  was  primarily  due to the  non-cash
interest charge of $215,000 related to the sale of the subordinated  convertible
notes payable plus higher interest related to the line of credit.

Loss from  continuing  operations of $ 467,000 for the first quarter of 2000 was
$413,000  higher than the first quarter of 1999.  The increased  loss was due to
lower sales volume  while costs of sales  increased  and the  non-cash  interest
charge related to the subordinated convertible notes in 2000.

Discontinued  operations  represent the  mineralogical  and geochemical  testing
business segment that was disposed of as of September 30, 1999. Operating losses
in this segment were caused by the lower sales of services in the quarter.

Capital Resources and Liquidity

The following is presented on a consolidated basis including both continuing and
discontinued operations.

The Company is faced with a significant  working capital shortage.  At March 31,
2000,  negative  working  capital was  $1,729,000.  Management  is attempting to
minimize the  negative  impact of the working  capital  shortage  through  close
supervision of general and administrative  expenses. In addition, the Company is
seeking  additional equity and/or debt financing.  The Company has raised equity
capital  from  certain of its  existing  stockholders  and may continue to raise
additional  equity  capital from them. No assurance can be made that  additional
capital will be raised, or if raised, that it will be on terms beneficial to the
Company.



                                    Page 16
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Cash and cash  equivalents  totaled  $13,000  at March 31,  2000  compared  with
$92,000 at December 31, 1999. The $79,000  reduction  resulted from cash used in
operating  activities  of  $298,000  and cash used in  investing  activities  of
$2,000, offset by cash flows from financing activities of $221,000.

Cash used in operations of $298,000  resulted from operating  losses of $467,000
plus an increase in operating assets (net of operating liabilities) of $119,000,
offset  by  various  non-cash  items  including  depreciation  and  amortization
($37,000),  non-cash  charges  related  to  subordinated  convertible  notes and
non-cash compensation ($240,000) and bad debt provisions ($3,000).

Cash used in investing  activities of $2,000 was primarily  related to cash paid
in connection with the purchase of laboratory equipment.

Cash from financing  activities provided cash of $221,000.  Financing activities
were  primarily  related  to  cash  collected  of  $216,000  under  subscription
agreements with existing  shareholders to issue subordinated  convertible notes.
The notes are  convertible  into shares of  restricted  common stock at $.06 per
share.  Borrowing under the line of credit provided $18,000 of cash in the first
quarter.

As of December 31, 1999,  the Company had a net working  capital  deficiency  of
$1,539,000.  This net working capital deficiency resulted principally from a net
loss of  $2,795,000  which  includes the loss from  discontinued  operations  of
$2,333,000  (including  depreciation  and other  non-cash  charges) for the year
ended December 31, 1999. Also contributing to the working capital deficiency was
the line of  credit of  $267,000,  subordinated  convertible  notes  payable  of
$373,000,  net  liabilities  of  discontinued  operations  of $627,000 and trade
accounts  payable and accrued  expenses of $1,120,000  which  includes  accruals
related to the discontinued operations.

At  March  31,  2000,  the  Company  had a net  working  capital  deficiency  of
$1,729,000.  The  increase  in the deficit is  primarily  due to the loss in the
first  quarter  which was  financed  through the line of credit and  issuance of
subordinated convertible notes payable.

The Company's  current cash  requirements to sustain its operations for the next
year are estimated to be approximately  $600,000. The Company expects that these
requirements   will  be  provided  by  a  combination  of  cash  generated  from
operations,  cash provided by the  Company's  line of credit based upon eligible
domestic  accounts  receivable,  and cash from  short-term  debt  and/or  equity
financings with existing shareholders.



                                    Page 17
<PAGE>



                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

There can be no assurance that any funds required  during the next twelve months
or thereafter  can be generated  from  operations or, if such required funds are
not internally  generated,  that funds will be available  from external  sources
such as debt or  equity  financings  or  other  potential  sources.  The lack of
additional  capital  could force the Company to  substantially  curtail or cease
operations and would, therefore, have a material adverse effect on its business.
Further,  there can be no assurance that any such required  funds, if available,
will be available on attractive terms or that they will not have a significantly
dilutive effect on the Company's existing shareholders.

Income Taxes and Net Operating Loss Carryforwards

At March 31, 2000, the Company has approximately  $15,000 of alternative minimum
tax  credits  and unused  net  operating  loss  carryforwards  of  approximately
$6,300,000.  The alternative minimum tax credits have no expiration date and the
loss  carryforwards  expire in varying amounts from 2000 to 2020 and are subject
to certain limitations under Section 382 of the Internal Revenue Code ("IRC") of
1986 as amended.

Inflation

Inflation  was not a  material  factor  in  either  the  sales or the  operating
expenses of the Company.

Year 2000

During  1999,  the  Company  initiated  its Year 2000  compliance  project.  The
evaluation addressed internal hardware and software, production instruments, key
vendors,  customers,  and other significant  third parties.  The Company did not
experience  any Y2K  disruptions,  not did any  entity  expend  any  significant
amounts during 1999 or in 2000 to ensure Y2K compliance.











                                    Page 18
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

PART II

Other Information

Item 1.   Legal Proceedings.
          None.

Item 2.   Changes in Securities and Use of Proceeds.

          During January  through March 2000,  the Company issued  subordinated,
          convertible  notes  pursuant  to  subscription  agreements  to certain
          existing  stockholders.  Such notes are convertible into shares of the
          Company's  common  stock  at $.06  per  share,  at the  option  of the
          Company.  Such stockholders  include a major stockholder who purchased
          notes of $184,000 and the Company's  President who purchased  notes of
          $8,000.  The  notes,  which are  secured by  substantially  all of the
          Company's  assets are  subordinated  to the line of credit and are due
          two  years  from the date of  issuance.  The  notes  are  non-interest
          bearing.  There was no  underwriter,  placement agent or broker dealer
          involved in the sale of the notes. The Company claimed  exemption from
          registration  under the Securities Act of 1933 pursuant to the private
          offering  exemption  set forth in Section 4 (2)  thereof.  The Company
          claimed this exemption by virtue of offering the securities  privately
          to only a small number of  stockholders  who already had a substantial
          familiarity  with the Company and to whom the appropriate  disclosures
          were made.

Item 3.   Defaults Upon Senior Securities.
          None.

Item 4.   Submission of Matters to a Vote of Security Holders.

          Schedule 14A, Proxy Statement,  to amend the Company's  Certificate of
          Incorporation, as amended, to increase the authorized number of shares
          of  Common  Stock  from  10  million  to  50  million.  At  a  special
          stockholders meeting held on March 29, 2000, the shareholders voted in
          favor of increasing  the number of  authorized  shares of common stock
          from 10  million to 50  million.  All votes cast voted in favor of the
          increase in authorized shares.

Item 5.   Other Information.
          None

Item 6.   Exhibits and Reports on Form 8-K.

          Form 8-K, Current Report,  dated March 3, 2000 regarding  financing by
          the Company  involving  the issuance of  convertible  notes and common
          stock.



                                    Page 19
<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES


          Exhibit No.               Description
          ----------                -----------

             10.4                   Form of Convertible Note of the Company
                                    Issued to investors

             10.5                   Form of Security Agreement between the
                                    Company and Investors

             10.6                   Form of Registration Rights Agreement
                                    Between the Company and Investors

          Form 8-K,  Current Report,  dated March 3, 2000 regarding the transfer
          of the Company's  contracts and customers  relating to the mineral and
          metallurgical analytical services performed by the Company.

          Exhibit No.               Description
          ----------                -----------

             10.3                   Agency Agreement between Inspectorate
                                    Griffith USA, Inc. and the Company


             27                     Financial Data Schedule.















                                    Page 20
<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:  June 13, 2000                   By: /s/J. Graham Russell
       -------------                       -------------------------------------
                                           J. Graham Russell
                                           President and C.E.O.






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