<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

     [X]  ANNUAL REPORT under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                   For the fiscal year ended December 31, 1998
                                       OR
     [ ] TRANSITION REPORT Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
     For the transition period from _________ to ____________ 
     Commission File Number 0-8241

                          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 offices)               (Zip Code)

Issuer's telephone number, including area code   (303) 277-1687
                                               -------------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                     --------------------------------------
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
                      Yes    X      No
                            ---        ---

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B and no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB.[X]

The issuer's net revenues for the fiscal year ended December 31, 1998 were
$6,240,000.

The aggregate market value of voting stock held by nonaffiliates of the
registrant, based on the most recent trading date (April 8, 1999), is
$1,640,718.

                                       1

<PAGE>

Number of shares outstanding as of April 8, 1999, of Common Stock, $.01 par
value - 6,562,871.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):

Yes         No   X
    ---         ---
                                            PART I


ITEM 1.  DESCRIPTION OF BUSINESS

Statements made or incorporated in this report include a number of 
forward-looking statements. Forward-looking statements include, without 
limitation, statements containing the words "anticipates", "believes", 
"expects", "intends", "future", and words of similar import which express 
management's belief, expectations or intentions regarding the Company's 
future performance or future events or trends. The Company wishes to caution 
readers that forward-looking statements involve known and unknown risks, 
uncertainties and other factors, as discussed herein and in other materials 
filed by the Company with the Securities and Exchange Commission. Such risks, 
uncertainties and other factors may cause actual results, performance or 
achievements of the Company to differ materially from those anticipated and 
expressed or implied by such forward-looking statements. The Company 
undertakes no obligation to publicly update or revise any forward-looking 
statements, whether as a result of new information, future events or 
otherwise.

(a)  COMPANY DEVELOPMENT

Barringer Laboratories, Inc. (the "Company") provides analytical services to 
the environmental services and mineral exploration industries. The Company 
was organized under Delaware law in December 1988 to conduct the laboratory 
business previously conducted by Barringer Technologies, Inc. ("BTI"), the 
Company's founder.

The Company's principal executive office is located at 1500 West 6th Avenue, 
Suite 300, Golden, Colorado. This location is also the site of the Company's 
environmental testing laboratory. The Company also maintains a full service 
mineral assay and geochemistry laboratory in Reno, Nevada.

In October, 1993, the Company formed a wholly owned Mexican subsidiary, 
Barringer Laboratorios de Mexico S.A. de C.V. ("BLM"), which owns and 
operates a 5,000 square foot sample preparation laboratory in Hermosillo, 
Sonora. In October, 1998, BLM upgraded a former sales office in Durango City, 
Durango into a 6,500 square foot sample preparation laboratory.

In November, 1996, the Company entered into an agreement with Servicios
Ecologica S.A. ("SESA"), the Peruvian subsidiary of a Canadian environmental
services company, and Dr. Clifton Farrell, to form a Peruvian subsidiary of the
Company, Barringer Laboratories Del Peru S.A. ("BLP"). The Company owns 67% of
the common stock of BLP, SESA 28% and Dr. Farrell the remaining 5%. During 1997,
BLP established a 4,400 square foot sample preparation laboratory in Lima.


                                      2

<PAGE>

In July, 1997, the Company established a wholly owned subsidiary in Nicaragua,
Barringer Laboratorios de Nicaragua, S.A. ("BLN"). Between July, 1997 and March,
1999 BLN operated a 7,000 square foot sample preparation laboratory in Managua,
primarily serving a single major customer with a large exploration program in
Nicaragua. In May, 1998, BLN established a second sample preparation laboratory
on the site of this customer's exploration property at La Rosita. Due to the
temporary cessation of this customer's exploration activity in Nicaragua, both
of these facilities have been closed down and the equipment is currently in
storage at the customer's mine site in Nicaragua pending a resumption of
exploration work.

In November, 1998, the Company established a branch office in Medellin, Colombia
which then assumed the assets and operations of an approximately 4,000 square
foot sample preparation laboratory formerly owned and operated by a major
customer.

Also in November, 1998, the Company acquired the customer base and entered into
a noncompete agreement with Shasta Geochemistry Laboratory, Inc. ("Shasta"), a
small mineral testing company based in Redding, California. The former Shasta
business has been consolidated into the Company's mineral testing operation in
Reno and the former Shasta laboratory in Redding closed down.

(b)  DESCRIPTION OF THE COMPANY'S BUSINESS

OVERVIEW OF SERVICES PROVIDED

The Company provides analytical testing operations through two divisions:

     ENVIRONMENTAL DIVISION

     The Company performs independent analytical testing services for
     governmental agencies, engineering consulting firms, industrial companies
     and other entities involved in environmental monitoring programs and the
     treatment and management of hazardous waste. The market for the Company's
     services results primarily from its customers' need to comply with United
     States Federal, state and local environmental regulations. The Company
     conducts a modest amount of work for customers required to comply with
     similar environmental regulations in other countries. Customers typically
     rely heavily on independent laboratories such as the Company to support
     their efforts to comply with these regulations.

     The Company's environmental facility provides a wide range of laboratory
     testing services to detect and measure the presence of chemical and/or
     radioactive contamination in samples of water, soil, sediments, air,
     industrial wastes and effluents, biological materials, vegetation, produce
     and animal tissues, and body fluids. The analytical activities of the
     laboratory may be divided into three categories:


                                      3

<PAGE>

          Radiochemistry, or testing for low level radioactive contaminants,
          including naturally occurring isotopes such as uranium and radium, the
          transuranics such as plutonium and americium and man-made isotopes
          such as cobalt 60 and iron 55.

          Testing for organic chemical contaminants such as hydrocarbons,
          pesticides, herbicides, polychlorinated biphenyls (PCBs), and
          polynuclear aromatics (PNAs).

          Testing for inorganic chemical contaminants such as trace metals,
          nitrates, and sulfates. Included in this category are waste
          characterization indicators such as corrosivity, ignitability and
          reactivity required under the Resource Conservation and Recovery Act
          of 1976, as well as wastewater characterization indicators such as
          biological (or chemical) oxygen demand (BOD/COD), and turbidity
          required under the Clean Water Act.

     The Company's environmental laboratory also has the ability to analyze
     mixed wastes: i.e. waste materials that are co-contaminated with both
     chemical and radioactive contaminants. In 1998, radiochemistry comprised
     approximately 60% of the environmental laboratory's work, inorganic
     analysis 26.5% and the balance organics analysis. Even though the Company's
     environmental laboratory has the ability to perform organic and inorganic
     chemical analysis for a wide range of potential customers with
     environmental compliance needs, most of this business is related to, or
     supportive of, the Company's radiochemistry activity. During 1998 the
     Environmental Division processed samples for 287 customers.

     MINERAL DIVISION

     The Company's mineralogical and geochemical testing activities are provided
     largely in support of the exploration programs of mining companies. The
     historical focus of the Mineral Division's business has been the precious
     metal mining companies, principally gold miners. The Company is now
     conducting an increasing amount of work for base metal mining companies.
     The mineral laboratory is equipped to perform precious metal fire assays as
     well as geochemical determination of trace quantities of "pathfinder"
     metals such as lead, zinc, copper and others. Cyanide leach tests for
     characterizing the metallurgical properties of gold ores are also
     conducted. The mineral laboratory also includes a metal assay laboratory
     for the analysis of high concentrations of base metals such as copper,
     lead, iron and zinc. Supporting the Reno laboratory are sample preparation
     laboratories in Hermosillo and Durango, Mexico; Managua, Nicaragua
     (temporarily closed); Lima, Peru; and Medellin, Colombia. Most of the
     Mineral Division's work originated outside the United States in 1998.


                                      4

<PAGE>

          SALES BY DIVISION

          The following table sets forth sales by Division for the past two
          fiscal years (in thousands $).

<TABLE>
<CAPTION>
                                                      1998            1997
                                                      ----            ----
               <S>                                  <C>             <C>
               ENVIRONMENTAL DIVISION
                       Radiochemistry               $2,226          $1,935
                       Organic Analysis                478             947
                       Inorganic Analysis              977           1,160
                                                    ------          ------
                       TOTAL ENVIRONMENTAL          $3,681          $4,042
                                                    ------          ------
               MINERAL DIVISION
                       United States                $  336          $1,295
                       Latin America                 1,843           1,378
                       Spain                           380             464
                                                    ------          ------
                       TOTAL MINERAL                $2,559          $3,137
                                                    ------          ------
                       TOTAL COMPANY                $6,240          $7,179
                                                    ------          ------
                                                    ------          ------
</TABLE>

CUSTOMER BASE AND MARKETING ACTIVITIES

While the market for environmental testing services is widely distributed across
the United States, the Company's special expertise in radiochemistry means that
its Environmental Division's customers are widely scattered geographically. They
include environmental consulting engineering firms, hazardous and low level
radioactive waste treatment/disposal companies, public utilities, industrial
companies (including mining companies) and various Federal, state and local
government agencies.

In 1998, the Environmental Division had 287 customers, of which the three
largest accounted respectively for 19.6%, 17.7% and 4.0% of the Division's total
revenues. The Division's top 10 customers accounted for 56% of total revenues.
The loss of either of its top two customers would represent a material adverse
development for the Company and would probably result in a downsizing of its
environmental laboratory, at least on a temporary basis.

The Mineral Division's customers are also widely distributed geographically and
consist largely of precious metal mining companies. The Mineral Division had
approximately 100 customers in 1998, the three largest of which accounted
respectively for 39.6%, 14.8% and 3.4% of the Division's total revenues. The
largest of these customers, which contributed over 50% of the Division's
business during the first 6 months of 1998, also accounted for 3% of the
Environmental Division's 1998 revenues. Financial problems caused this customer
to shut down its Central American exploration


                                      5

<PAGE>

program in September 1998. This, in turn, led to a downsizing of the Company's
main mineral testing laboratory in Reno and, in early 1999, to closure of the
Company's two sample preparation facilities in Nicaragua. There is no material
current business from that customer. As of April 8, 1999, neither of the
Company's operating divisions is subject to a lost-customer risk of this
magnitude.

The Company's customers initially award contracts for analytical work, or major
analytical projects, on the basis of responses to a competitive bidding process.
However, in both of the Company's main markets, customers are strongly inclined
to award continuing repeat business to vendors with which they are satisfied
according to three key criteria: (a) accuracy of the analytical data provided;
(b) quality of customer service and (c) price.

The Company maintains a small, highly qualified group of technical sales staff,
who conduct much of their activity by telephone and mail, particularly as it
relates to the competitive bidding process that dominates both of the Company's
main markets for new contracts and projects. However, these sales staff are
devoting increasing amounts of their time to sales trips to visit key customers
and potential customers in different geographic regions of the United States,
and, in the case of the Mineral Division, Mexico, Peru, Nicaragua and other
Latin American countries.

The Company also maintains senior project management staff in both Divisions
whose tasks are to ensure that the technical requirements of incoming work are
well defined and that customers are updated on the status of work or projects
currently in progress in the Company's laboratories.

The Company is an exhibitor at a small number of trade shows each year. These
shows are chosen for their relevance to the Company's areas of particular
expertise and include hazardous waste industry conferences (particularly those
focusing on the nuclear industry) and mining industry symposia. Recently, the
Company has made a number of technical presentations at major mining industry
conferences as a means of promoting its capabilities. The Company is active in a
number of trade associations and other industry forums as a means of promoting
its visibility and technical expertise.

Given the specialized nature of the Company's analytical activities, Management
does not believe that print advertising is a productive channel for attracting
new business and, therefore, devotes few resources to this form of promotional
activity. However, the Company has established a website on the Internet which
is updated regularly with new developments in the company that may be of
interest to its customers.


                                      6

<PAGE>

INTERNATIONAL ACTIVITIES

During the past several years, the mining companies, which are the primary
customers of the Company's Mineral Division, have reduced their exploration
activities in North America, focusing increasingly on Latin America where
resource yields are often higher and environmental impediments to exploration
and extraction work less severe. For example, gold cash production costs are in
the range of $65-120 per ounce in many Latin American countries compared with
$200-300 per ounce in North America. Since 1993, the Company's Mineral Division
has taken successful steps to maintain its standing in this changing market by
establishing local operations to service the exploration programs of its
customers in countries outside North America. Specifically:

     In October, 1993, the Company established a 5,000 square feet sample
     preparation laboratory in Hermosillo, Sonora, Mexico, owned and operated by
     its wholly owned Mexican subsidiary, BLM. In October, 1998, BLM expanded
     its capability in Mexico by upgrading a former sales office in Durango
     City, Durango to a 6,500 square foot sample preparation laboratory.

     In November, 1996, the Company established a 4,400 square feet sample
     preparation laboratory in Lima, Peru, owned and operated by its 67% owned
     Peruvian subsidiary, BLP.

     In July, 1997, the Company established a 7,000 square feet sample
     preparation laboratory in Managua, Nicaragua, owned and operated by its
     wholly owned Nicaraguan subsidiary, BLN. This was supplemented in May,
     1998, with a portable sample preparation laboratory located at La Rosita.
     Both of these facilities are temporarily closed and the equipment in
     storage pending a resumption of exploration activity by the Company's main
     customer in Nicaragua.

     In November, 1998, having established a branch office in Colombia, the
     Company took over the assets and operation of a 4,000 square foot sample
     preparation laboratory previously owned by a major customer in Medellin.

All of these sample preparation facilities are equipped with drying ovens and
rock crushing equipment for pulverizing the drill cores received from customers
in these countries. Following homogenization of the crushed rock samples,
representative samples are airfreighted to the Company's analytical laboratory
in Reno for fire assay and/or geochemical analysis.

The Company has utilized its presence in these Latin American markets to develop
additional business for its Environmental Division. North American mining and
other industrial corporations wishing to conduct business in these countries are
typically required to conform to environmental standards similar to those


                                      7

<PAGE>

prevailing in North America. The absence of high quality laboratories in these
countries generally requires that analytical work associated with meeting these
standards be sent to North American laboratories. The proportion of the
Company's environmental work originating in Latin America amounted to
approximately 3% of the Company's total 1998 environmental revenues.

Management believes that it is important to protect and improve its position in
the mineral exploration market in North America (notably Nevada), but that it
will be equally necessary to expand its presence in other countries as the
worldwide mineral exploration industry continues to diversify away from its
traditional geographical locations. However, political unrest or severe economic
or financial disruption (e.g. inflation, currency fluctuations) in any of the
countries in which the Company has established, or might in the future establish
operations, could compromise the viability of its operations in those countries.

ENVIRONMENTAL COMPETITION

Management believes that the size of the U.S. environmental and hazardous waste
testing market exceeds $1 billion annually and that it is served by as many as
1,000 independent analytical laboratories. Most firms competing in this highly
fragmented market utilize similar instrumentation and analytical methods, and
have comparable technical capability to that of the Company. Many are
considerably larger and may have significantly greater financial resources than
the Company.

Since 1991, the U.S. market for environmental testing services has been
characterized by significant overcapacity. Accordingly, while a reputation for
producing accurate data, rapid response to customer requirements and an ability
to meet tight turnaround standards are important competitive factors, most
competition has been based largely on price. Over the past seven years, prices
in some segments of this market have declined by as much as 60%.

There have been a number of attempts to achieve dominance in this industry
through consolidation strategies, but, to date, none have succeeded in creating
a financially successful company with significant market share. During the last
two years, several of the larger environmental laboratory groups have either
filed for protection under Federal bankruptcy laws or significantly downsized
their operations through laboratory closures. Many smaller firms have also
closed down. Current industry reports suggest that as much as 15 - 20% of the
industry's capacity has been eliminated in the past two years.

While there can be no assurance that there will be any improvement in the
competitive conditions prevalent in the market over the past several years, or
that new competitors will not emerge, management believes that the market may be
returning to a more stable supply/demand position.


                                     8

<PAGE>

While the Company's Environmental Division does conduct a portion of its
business in the general market for environmental chemistry services, its
particular reputation and expertise lie in radiochemical analysis. Within the
overall market, radiochemistry is a niche segment in which there are no more
than 10 - 15 major competitors nationwide. Management believes that the market
for radiochemistry services offers long term, stable work prospects because the
technical issues involved in the clean-up of low level radioactive waste tend to
be inherently more complex than those encountered in the remediation of
non-radioactive chemical waste.

The Department of Energy has made it clear that the clean-up of many of its
radioactively contaminated sites will take at least 20 years, during which time
there will be a steady flow of work for competent contractors including
analytical laboratories such as the Company's. Management believes that a
further long term business opportunity may be developing in the radiochemistry
segment associated with the decommissioning of the country's over 100 nuclear
power plants, which are reaching the end of their technical and economic lives.

The Company also believes that its growing presence and reputation in the
exploration-related mineral testing market in Latin America represents an
opportunity to secure an increasing amount of environmental work from this
region.

MINERAL COMPETITION

The market for mineral assay services is considerably smaller than that for
environmental testing services, both inside and outside the United States. There
are several competitors with a much larger market share than that of the
Company. Two of these competitors are subsidiaries of large, multi-dimensional
testing firms with resources significantly greater than those of the Company.

Following several years of strongly increasing activity, the mineral exploration
industry has suffered a severe downturn since about the middle of 1997. This was
caused in part by low prices for gold and other metals (exacerbated by the
economic downturn in developing Asian economies, which are major consumers of
base metals such as copper, lead and zinc). Also contributing to the exploration
cutbacks was a shortage of investment capital, largely caused by a loss of
confidence in the junior mining companies brought about by the Bre-X episode, a
massive gold mining fraud in Indonesia exposed in early 1997. Current industry
reports suggest that worldwide mineral exploration activity in 1999 will be 40%
below the levels of 1996 and early 1997.

During the last 10 years, the mining industry has refocused its exploration
efforts on Latin America and, to a lesser extent, Asia and Africa, at the
expense of North America. The Company has, as mentioned earlier, taken a number
of steps in recent years to position itself to take advantage of the opportunity
in the Latin


                                      9

<PAGE>

American market. The Company's experience is that the key to success in this
process is an ability to respond quickly to customers' changing geographical
requirements while maintaining quality in its operations and services.

Given the downturn in the overall mineral exploration market and the general
shift of exploration activity out of North America, many of the smaller
laboratory companies serving this traditional market are finding themselves
under increasing price and volume pressure. Management believes that these
difficult market conditions may provide an opportunity for the Company to
acquire the business of some of these competitors and expand its share of the
North American market. The Shasta acquisition mentioned above was an example of
this type of opportunity.

While there is no assurance that the market for exploration-related mineral
testing will continue to grow in Latin America, the Company has a well
established operational and financial formula for establishing sample
preparation facilities in these countries quickly and cost-effectively, and for
finding competent local technical and managerial staff who can maintain the
Company's quality standards. Management believes that this capability should
allow it to secure and maintain a greater share of this market as the mining
industry continues to expand outside North America and that this business
formula can be extended to other regions of the world where mineral exploration
activity is increasing, most notably Africa and Asia (including the former
Soviet Union countries). No specific plans have been made for expansion into
other foreign markets beyond Latin America.

During 1998, the Mineral Division began to offer a number of ancillary services
to its mining industry customers. These include a geochemical analytical
technology (licensed from a third party company) for assisting in the
identification of mineralization that is buried under hundreds, or even
thousands, of feet of transported overburden; and geochemical data processing
services. While these services have begun to generate a small amount of revenue
in their own right, the Company's objective is to try to distinguish itself from
its industry competitors by providing additional "value-added" services with a
view to expanding its relationships with the major mining companies to all
stages of the mineral exploration process.

LICENSES AND PERMITS

The Company's environmental laboratory requires a number of licenses,
certifications and accreditations in order to provide the range of analytical
services it deems necessary to compete effectively in its target markets. These
are issued by Federal and state environmental agencies, private accrediting
bodies and private industrial corporations. The Company devotes significant
resources to the maintenance of these licenses and certifications, which are
typically renewable on an annual or other periodic basis.


                                      10

<PAGE>

During the course of the next two years, the Company will be required to secure
accreditation under the National Environmental Laboratory Accreditation Program
("NELAP"), a recently promulgated national standard of accreditation for
environmental laboratories designed to reduce the number of separate
accreditation systems to which laboratories are currently subject. Securing
NELAP accreditation (which is based largely on the ISO Guide 25 standard for
laboratory accreditation) will require a major investment of time and effort,
including the use of outside consulting services. However, because NELAP is
intended to be reciprocal among participating states, Management believes that,
once this accreditation is secured, it will reduce the Company's total cost of
maintaining the necessary Federal and state licenses and accreditations.

In early 1999, the Toronto Stock Exchange and Ontario Securities Commission 
finalized a series of recommendations to raise the disclosure standards of 
mining companies trading on Canadian stock exchanges. The report included a 
recommendation that mineral testing laboratories conducting work for Canadian 
mining companies be required to secure accreditation to ISO Guide 25 
standards within the next 5 years. The report made it clear that it expects 
this accreditation process to become a de facto global standard. Management 
believes it essential that the Company's Mineral Division secure this 
accreditation within the next 12 - 18 months in order to maintain its share 
of business with Canadian mining company customers, and estimates that it 
will require a minimum investment of $50,000 in outside consulting assistance 
to upgrade procedures and quality assurance systems in the Mineral Division. 

During 1998, the Company reached agreement with Barringer GeoSystems (a 
company owned by a board member) to license, on an exclusive basis, a 
geochemical analytical technology for identifying mineralization that lies 
buried under layers of transported overburden. The Company is actively 
promoting this technology and has secured work from several major mining 
companies. The agreement with Barringer GeoSystems provides for a 
renegotiation of the licensing arrangement in the event the volume of 
business reaches a certain level in the future.

REGULATION

The environmental side of the Company's activities is regulated by the
Environmental Protection Agency, the Nuclear Regulatory Commission and the
Occupational Safety and Health Agency. Most of these regulations concern the
analytical methods used in the laboratory, maintenance of a safe working
environment, and the proper disposal of used samples and laboratory waste.


                                      11

<PAGE>

The mineral testing side of the Company's activities is less heavily regulated
but is also required to conform to Federal and local regulations concerning safe
working conditions and the disposal of waste material from its operations. The
Company is not aware of any new regulatory initiatives which, if adopted, would
impose significant incremental costs on the Company. However, the current
Canadian initiative to establish an accreditation system for mineral testing
laboratories (see above) may eventually lead to some form of regulatory
oversight which could impose a financial cost upon the Company.


EMPLOYEES

As of December 31, 1998, the Company had 123 employees of whom 110 were employed
on a full time basis. The total number of staff employed in the United States
was 94, of whom 81 were employed on a full time basis. Most of the Company's
technical staff are degreed professionals, and Management believes the Company's
reputation and ability to provide customers with high quality data and good
service depend upon its ability to attract and retain highly qualified technical
staff. None of the Company's employees are represented by any union and the
Company considers its employee relationships to be satisfactory.

OTHER

The Company's business does not depend on the availability of raw materials, nor
does the Company have any patents, trademarks, licenses (except for the license
from Barringer GeoSystems, as discussed above), franchises, concessions, royalty
agreements or labor contracts. The Company does not devote any significant
efforts to research and development.


                                      12

<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

The Company leases office and laboratory space from unaffiliated parties as
follows:

<TABLE>
<CAPTION>
            Location                        Use              Square      Annual     Expiration
            --------                        ---              Footage      Lease        Date
                                                             -------     ------     ----------
<S>                                <C>                      <C>         <C>        <C>
15000 West 6th Avenue, Suite 300   Offices and
Golden, Colorado, USA              analytical services       17,800     $174,000   February 2001
                                   laboratory

5301 Longley Lane, Building E,     Offices and
Suite 178, Reno, Nevada, USA       analytical services       25,500     $194,000   September 2001
                                   laboratory                                     

5301 Longley Lane, #24, Reno,      Storage space
Nevada, USA                                                   2,420      $13,800   February 2001

Blvd. Garcia Morales 829-A         Sample preparation
Bodega 2, Colonia La Manga,        laboratory                 5,200      $12,000   January 2000
Hermosillo, Sonora, Mexico

Carretera Panamericana Km 10445    Sample preparation
Durango, Durango, Mexico           laboratory                 6,500       $8,000   June 1999

Avenida Domingo Orue               Sample preparation
Surquillo, Lima 34, Peru           laboratory                 4,400      $24,000   Monthly

Calle 80 Sur N.47 D-65, L-106      Sample preparation
Sabaneta, Colombia                 Laboratory                 4,000      $24,000   Monthly
</TABLE>

The Company believes that the office and laboratory space it currently leases is
adequate for its current operations and is in operable condition.


                                      13

<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

In early 1998, the Company learned that certain employees in one section of its
environmental laboratory did not consistently follow laboratory practices 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.

The Company is not a party to any material, pending, or threatening litigation.


                                      14

<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's security holders during the
last quarter of its fiscal year ended December 31, 1998.


                                      15

<PAGE>

                                     PART II


ITEM 5.  MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

PRICE RANGE OF OUTSTANDING COMMON STOCK

The Company's common stock is traded on the OTC Bulletin Board under the symbol
BALB. On March 30, 1999, there were approximately 35 holders of record (both
beneficial and nominee) of the common stock.

The following table sets forth the high and low bid quotations per share of
common stock for each quarter of the years indicated. The prices represent
quotations between dealers as reported by the NASDAQ and do not include retail
markup, markdown or commission and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
                                           Common Stock
                                        ------------------
                                        High           Low
                                        ----           ---
<S>      <C>                           <C>            <C>
1997     First Quarter                 $3.13          $1.69
         Second Quarter                 3.00           1.88
         Third Quarter                  2.19           1.50
         Fourth Quarter                 1.94           1.50

1998     First Quarter                  1.375           .625
         Second Quarter                  .59375         .3125
         Third Quarter                   .5625          .34375
         Fourth Quarter                  .3125          .21875
</TABLE>


DIVIDEND POLICY

The Company has not paid cash dividends on its common stock and does not
anticipate paying cash dividends in the foreseeable future. The payment of
future dividends and the amount thereof will depend upon the Company's earnings,
financial condition, capital requirements and such other factors as the Board of
Directors may consider relevant.


                                      16

<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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 uncertainty concerning the future price of gold and
other metals.

With the exception of historical information, the matters discussed below under
the headings "Results of Operations" and "Capital Resources and Liquidity"
include forward-looking statements. Forward-looking statements include, without 
limitation, statements containing the words "anticipates", "believes", 
"expects", "intends", "future", and words of similar import which express 
management's belief, expectations or intentions regarding the Company's 
future performance or future events or trends. The Company wishes to caution 
readers that forward-looking statements involve known and unknown risks, 
uncertainties and other factors, as discussed herein and in other materials 
filed by the Company with the Securities and Exchange Commission. Such risks, 
uncertainties and other factors may cause actual results, performance or 
achievements of the Company to differ materially from those anticipated and 
expressed or implied by such forward-looking statements. The Company 
undertakes no obligation to publicly update or revise any forward-looking 
statements, whether as a result of new information, future events or 
otherwise.


RESULTS OF OPERATIONS

The following is a breakdown of consolidated operating results for the years
ended December 31, 1998 and 1997.

<TABLE>
<CAPTION>

                                            Consolidated
                                     --------------------------
                                         Years Ended 12/31
                                        1998           1997
                                    ---------------------------
<S>                                 <C>             <C>
Sales of Services                   $ 6,240,000      $7,179,000
Cost of Services Sold                 5,178,000       5,526,000
                                    ---------------------------

Gross Profit                          1,062,000       1,653,000

Selling, General and
  Administrative Expenses             2,485,000       1,819,000
  Corporate Realignment                    -            131,000
                                    ---------------------------
Operating Loss                       (1,423,000)       (297,000)

Other Income (Expense)                    5,000          18,000
Gain (Loss) on Disposal of  Assets       17,000         (87,000)
Minority Interest in the Loss
  of Subsidiary                           5,000          54,000
                                    ---------------------------
Net Loss                            $(1,396,000)      $(312,000)
                                    ---------------------------
                                    ---------------------------
</TABLE>


                                      17

<PAGE>

1998 COMPARED TO 1997

Net sales for 1998 of $6,240,000 reflect a 13% decrease compared to 1997 
sales of $7,179,000. The Environmental Division's 1998 sales fell by 
$361,000, or 8.9%, compared to 1997. This reduction in sales largely 
reflected the fact that 1997 sales were boosted in the second half of the 
year by two large, one-time projects. One of the Division's key objectives in 
1998 was to smooth out the flow of work from month to month by avoiding such 
large projects which tend to have a disruptive effect on the operation's 
ability to provide a consistently high level of customer service.

Mineral Division's sales fell by $578,000, most of this reduction occurring 
in the second half of the year. Sales originating in the United States fell 
by $960,000, or 74%, compared with 1997, largely due to the reduction in 
mineral exploration work brought about by low gold and other metal prices, 
and the downturn in investment in junior mining companies (see Part I, Item 1 
b "Description of Company's Business" above). Sales from Latin America 
increased by $465,000 to $1,843,000. This increase is comprised of a 
reduction in Mexican sales of $145,000 offset by a strong sales increase in 
Central America. However, almost all Central American sales in both 1997 and 
1998 came from a single customer whose exploration program was dramatically 
reduced in the second half of 1998. Sales from outside the United States and 
Latin America (almost entirely from a single customer in Spain) totaled 
$380,000, a reduction of $84,000 compared to 1997.

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 was issued 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. In 1998, 
United States sales from former Shasta customers totaled $20,000. 

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 assets nor assumed any liabilities of Shasta other than those
described above.


                                      18

<PAGE>

Gross profit as a percentage of sales fell from 23% in 1997 to 17% in 1998.
Despite reduced sales, the Environmental Division's gross profit margin
increased from 24% in 1997 to 26% in 1998 due to a reduction in the unit costs
of direct labor and other direct costs. Mineral Division's gross margin fell
from 23% in 1997 to 6% in 1998, the main reason being the steep decline in sales
in the second half of the year combined with the heavy fixed costs associated
with the Company's sample preparation facilities in Latin America.

Selling, General and Administrative ("SG&A") costs rose from $1,950,000 in 
1997 to $2,485,000 in 1998. The increase of $535,000 is more than accounted 
for by two exceptional items: professional expenses related to the EPA 
investigation ($330,000); compensation charges associated with the two 
private equity offerings during 1998 ($275,000). Asset disposals produced a 
gain of $17,000 compared to a loss of $87,000 for 1997. After taking into 
account miscellaneous income of $4,000 (compared to $18,000 in 1997), and 
eliminating the minority portion of losses in the Peruvian subsidiary ($6,000 
compared to $54,000 in 1997), the combination of reduced gross profit margin 
and the higher SG & A expenses as described above resulted in an increased 
loss before taxes of $1,084,000 ($1,396,000 compared to $312,000 in 1997).

CAPITAL RESOURCES AND LIQUIDITY

Cash and cash equivalents totaled $173,000 at December 31, 1998 compared with
$524,000 at December 31, 1997. The $351,000 reduction resulted from cash used in
operating activities of $956,000 and investments in equipment and facilities of
$137,000, offset by cash receipts from financing activities of $742,000.

Cash used in operations of $990,000 resulted from operating losses before taxes
of $1,396,000 plus a decrease in operating assets (net of operating liabilities)
of $82,000, offset by various non-cash items including depreciation and
amortization ($181,000), compensation charges (non-cash) relating to the
issuance of common stock ($300,000), and bad debt provisions ($24,000).

Cash used in investing activities of $103,000 was largely related to instrument
purchases for the Environmental Division's radiochemistry laboratory, and
equipment purchases and leasehold improvements associated with the establishment
of the Mineral Division's sample preparation facilities in Durango, Mexico and
La Rosita, Nicaragua.

Cash from financing activities resulted from the issuance of 4,722,223 shares of
the Company's common stock in two separate private offerings during the year
(see below). Net proceeds from these offerings as at December 31, 1998 were
$786,000 out of a total of $1,050,000 secured from these two offerings. The
difference was caused by the fact that $255,000 of the cash raised in the second
offering (which was dated December 28, 1998) was not actually received by the
company until early January 1999.


                                      19

<PAGE>

In early 1998, the Company learned that certain employees in one section of its
environmental laboratory did not consistently follow laboratory practices 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, 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.

The costs of legal and other professional fees incurred by the Company in
connection with this investigation totaled approximately $330,000 in 1998. As of
April 8, 1999, a further approximately $10,000 had been incurred in 1999. While
there can be no assurances that the Company will not incur further costs
relating to this episode, Management believes that the EPA investigation into
this matter has concluded and that the future financial impact on the Company
will not be material.

Faced in early 1998 with the considerable uncertainty surrounding the outcome of
the EPA's investigation and its related costs as described above, effective
April 13, 1998, the Company completed the private sale of 1,666,666 shares of
restricted common stock at a price of $.30 per share to provide additional
working capital of $500,000. These shares were issued below the value at which
the Company's stock traded in the period immediately preceding the offering. The
difference between the issuance price and the trading price at that time was
approximately $183,000, which was charged to compensation expense in the second
quarter of 1998. Among the subscribers to this offering were three members of
the Company's Board of Directors, all of whom are now significant existing
stockholders.

Following the steep decline in sales in the Company's Mineral Division in the
second half of 1998 and the resulting operating losses, effective December 28,
1998, the Company completed the private sale of 3,055,556 shares of restricted
common stock at a price of $.18 per share to provide additional working capital
of $550,000. These shares were issued below the value at which the Company's
stock traded in the period immediately preceding the offering. The difference
between the issuance price and the trading


                                      20

<PAGE>

price at that time was approximately $92,000, which was charged to compensation
expense in the fourth quarter of 1998. Among the subscribers to this offering
were three members of the Company's Board of Directors, all of whom now
individually hold in excess of 5% of the Company's outstanding common stock.

The Company's operating plan for the next twelve months will concentrate heavily
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, over the balance of 1999, the Company's
operating activities, plus the necessary investments to rebuild Mineral Division
sales, will require additional funding of approximately $500,000.

The Company is addressing this funding requirement in several ways. Management
believes that $150,000 can be made available through the release of a
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. The Company is currently negotiating to
replace the Certificate of Deposit with a bond.

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 (mentioned
above) 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 (as discussed
below) and could therefore have a material adverse effect on the Company's
business.

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.


                                      21

<PAGE>

The Company is in the process of replacing its two major computerized 
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 does not intend 
to prepare such plans. Actual results could differ materially from the above 
estimates concerning year 2000 issues.

INCOME TAXES AND NET OPERATING LOSS CARRYFORWARDS

The Company's effective tax rate differs materially from the Federal statutory
rate of 34% as discussed in the notes to the accompanying consolidated financial
statements.

At December 31, 1998, 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 $4,285,000. 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 December 31, 1998, a valuation allowance of $1,837,000 has been recorded,
as Management of the Company is not able to determine that it is more likely
than not that its deferred tax assets will be realized. The Company has recorded
a valuation allowance primarily related to the uncertainty of realizing
operating loss carryforwards subject to limitations under the IRC of 1986.

INFLATION

Inflation was not a material factor in either the sales or the operating
expenses of the Company during the two year period ended December 31, 1998, even
though Mexico is considered a highly inflationary economy as discussed in notes
to the accompanying consolidated financial statements.


                                      22

<PAGE>

                  BARRINGER LABORATORIES, INC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards ("SFAS") No. 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 No.
133 is effective for fiscal years beginning after June 15, 1999. Management
believes that the adoption of SFAS No. 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.


                                      23

<PAGE>

ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Barringer Laboratories, Inc.
Golden, Colorado


We have audited the accompanying consolidated balance sheets of Barringer
Laboratories, Inc. and subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Barringer
Laboratories, Inc. and subsidiaries at December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years then
ended, in conformity with generally accepted accounting principles.


                                                   /S/BDO SEIDMAN, LLP

Denver, Colorado
April 8, 1999


                                      24

<PAGE>

                       BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                     YEARS ENDED DECEMBER 31,
                                    --------------------------
                                      1998              1997
                                      ----              ----
<S>                                <C>              <C>
Sales of Services (Notes 11 & 12)  $6,240,000       $7,179,000
                                   
Cost of Services Sold               5,178,000        5,526,000
                                   ----------       ----------
                                   
  Gross Profit                      1,062,000        1,653,000
                                   
Selling, General and               
  Administrative Expenses           2,485,000        1,819,000
Corporate Realignment (Note 4)         -               131,000
                                   ----------       ----------
                                   
  Operating Loss                   (1,423,000)        (297,000)
                                   ----------       ----------
                                   
Other Income (Expense):            
  Interest income                      27,000           33,000
  Interest expense                    (11,000)         (17,000)
  Gain (loss)on disposal of assets     17,000          (87,000)
  Translation loss                    (12,000)          (3,000)
  Other                                 1,000            5,000
                                   ----------       ----------
                                   
Total Other Income (Expense)           22,000          (69,000)
                                   ----------       ----------
                                   
Loss before Income                 
  Taxes and Minority Interest      
  in Loss of Subsidiary            (1,401,000)        (366,000)
                                   
Provision for Income Taxes         
  (Note 7)                               -                -
                                   ----------       ----------
                                   
Loss before Minority               
  Interest in Loss                 
  of Subsidiary                    (1,401,000)        (366,000)
                                   
Minority Interest in Loss          
  of Subsidiary (Note 6)                5,000           54,000
                                   ----------       ----------

Net Loss                          $(1,396,000)      $ (312,000)
                                   ----------       ----------
                                   ----------       ----------
</TABLE>


See accompanying notes to consolidated financial statements.


                                      25

<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                    YEARS ENDED DECEMBER 31,
                                  -----------------------------
                                     1998              1997
                                     ----              ----
<S>                               <C>              <C>
Per Share Data (Note 8):

Net Loss per share

    Basic                         $     (.57)      $     (.20)
                                  -----------      -----------
                                  -----------      -----------
    Diluted                       $     (.57)      $     (.20)
                                  -----------      -----------
                                  -----------      -----------
Weighted average common
  shares outstanding

    Basic                          2,442,817        1,591,112
                                  -----------      -----------
                                  -----------      -----------
    Diluted                        2,442,817        1,591,112
                                  -----------      -----------
                                  -----------      -----------
</TABLE>





See accompanying notes to consolidated financial statements.


                                      26

<PAGE>

                   BARRINGER LABORATORIES, INC. & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                       ------------------------
                                          1998           1997
                                          ----           ----
<S>                                    <C>            <C>
Assets

Current Assets:
  Cash and cash equivalents            $  173,000     $  524,000
  Trade receivables, less
    allowance of $34,000 and
    $13,000 for doubtful accounts       1,064,000      1,062,000
  Prepaid expenses and other              247,000        127,000
  Subscription receivable (Note 8)        255,000           -
                                       ----------     ----------
    Total Current Assets                1,739,000      1,713,000
                                       ----------     ----------

Property and Equipment:
  Machinery and equipment               2,304,000      2,214,000
  Machinery and equipment under
    capital lease obligations             234,000        134,000
  Leasehold improvements                  664,000        663,000
  Office furniture and equipment           90,000         90,000
                                       ----------     ----------
                                        3,292,000      3,101,000
  Less accumulated depreciation and
    amortization                        2,964,000      2,809,000
                                       ----------     ----------

    Net Property and Equipment            328,000        292,000

Certificate of Deposit (Note 3)           150,000        150,000
Other Assets                              101,000         57,000
                                       ----------     ----------

Total Assets                           $2,318,000     $2,212,000
                                       ----------     ----------
                                       ----------     ----------
</TABLE>


See accompanying notes to consolidated financial statements.


                                      27

<PAGE>

                   BARRINGER LABORATORIES, INC. & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                ---------------------------------
                                                    1998                  1997
                                                -----------           -----------
<S>                                             <C>                   <C>
Liabilities and Shareholders' Equity

Current Liabilities:
  Trade accounts payable                        $   247,000           $   251,000
  Accrued liabilities:
    Payroll, compensation and
      related expenses                              343,000               290,000
    Accrued property tax                             46,000                   -
    Other                                           190,000               211,000
  Current maturities of obligations
    under capital leases (Note 5)                    74,000                38,000
                                                -----------           -----------
    Total Current Liabilities                       900,000               790,000

Obligations under capital lease,
  less current maturities (Note 5)                   71,000                54,000
                                                -----------           -----------
    Total Liabilities                               971,000               844,000
                                                -----------           -----------
Minority Interest (Note 6)                              -                   5,000

Commitments and Contingencies
  (Notes 5, 9 and 10)

Shareholders' Equity (Note 8)
  Preferred stock, $2.00 par value,
    1,000,000 shares authorized;
    none issued                                         -                     -
  Common stock, $0.01 par value,
    10,000,000 shares authorized;
    3,407,315 and 1,590,649 shares
    issued and outstanding                           34,000                16,000
  Common stock to be issued                         575,000                   -
  Additional paid-in capital                      3,184,000             2,397,000
  Accumulated deficit                            (2,423,000)           (1,027,000)
  Accumulated other comprehensive income            (23,000)              (23,000)
                                                -----------           -----------
Total Shareholders' Equity                        1,347,000             1,363,000
                                                -----------           -----------
Total Liabilities and
  Shareholders' Equity                          $ 2,318,000           $ 2,212,000
                                                -----------           -----------
                                                -----------           -----------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      28

<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                          (IN 000'S EXCEPT SHARE DATA)
                     YEARS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                     Common Stock              Treasury Stock  
                                          ----------------------------------   --------------- 
                                                Issued        To Be Issued
                                           Shares    Amount  Shares  Amount   Shares  Amount 
                                          ---------  ------ -------- ------  -------  ------ 
<S>                                       <C>        <C>    <C>      <C>     <C>      <C>    
Balance, January 1, 1997                  1,652,016  $  17        -     -     88,260  $ (103)  
                                          
Stock Granted to Management (Note 8)         16,636    -          -     -        -       -     
Exercise of Stock Options (Note 9)           53,400    -          -     -        -       -     
Purchase of Management Stock (Note 8)       (43,143)   -          -     -        -       -     
Retirement of Treasury Stock (Note 8)       (88,260)    (1)       -     -    (88,260)    103   
Net Loss for Year                               -      -          -     -        -       -     
                                          ---------  ------ --------- ------ -------  ------ 
Balance, December 31, 1997                1,590,649     16        -     -        -       -     
                                          
Private Placement, net of issuance        
 costs of $9, April 1998 (Note 8)         1,666,666     17        -     -        -       -     
Private Placement, December 1998 (Note 8)       -      -    3,055,556   550      -       -     
Stock Granted to Directors                
  (Notes 2 and 8)                               -      -      100,000    25      -       -     
Stock Issued in Acquisition (Note 8)        150,000      1        -     -        -       -     
Net Loss for Year                               -      -          -     -        -       -     
                                          ---------  ------ --------- ------ -------  ------ 
                                          
Balance, December 31, 1998                3,407,315  $  34  3,155,556 $ 575      -    $  -     
                                          ---------  ------ --------- ------ -------  ------ 
                                          ---------  ------ --------- ------ -------  ------ 
                                          
<CAPTION>                                 
                                          
                                          
                                                                   Accumulated
                                          Additional                  Other
                                           Paid-In   Accumulated  Comprehensive
                                           Capital     Deficit       Income        Total  
                                          ---------- -----------  -------------   ------- 
<S>                                       <C>        <C>          <C>             <C>     
Balance, January 1, 1997                   $2,532     $  (715)       $   (23)     $ 1,708 
                                                                                          
Stock Granted to Management (Note 8)          -           -              -            -   
Exercise of Stock Options (Note 9)             52         -              -             52 
Purchase of Management Stock (Note 8)         (84)        -              -            (84)
Retirement of Treasury Stock (Note 8)        (103)        -              -             (1)
Net Loss for Year                             -          (312)           -           (312)
                                            ------     -------        -------      -------
Balance, December 31, 1997                  2,397      (1,027)           (23)       1,363 
                                                                                          
Private Placement, net of issuance                                                        
 costs of $9, April 1998 (Note 8)             657         -              -            674 
Private Placement, December 1998 (Note 8)      92         -              -            642 
Stock Granted to Directors                                                                
  (Notes 2 and 8)                             -           -              -             25 
Stock Issued in Acquisition (Note 8)           38         -              -             39 
Net Loss for Year                             -        (1,396)           -         (1,396)
                                           ------     -------        -------      -------
                                                                                          
Balance, December 31, 1998                 $3,184      (2,423)      $    (23)       1,347 
                                           ------     -------        -------      -------
                                           ------     -------        -------      -------
</TABLE>

See Accompanying Notes to Consolidated Financial Statements.
      
                                          
                                      29  

<PAGE>

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

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                  ----------------------------------
                                                      1998                  1997
                                                  -----------           ------------
<S>                                               <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the year                             $(1,396,000)          $  (312,000)
Adjustments to reconcile net loss
  to net cash provided by (used in)
  operating activities:
  Compensatory costs related to
    issuances of common stock                         275,000                   -
  Depreciation and amortization                       181,000               254,000
  (Gain) loss on sale of assets                       (17,000)               87,000
  Bad debt expense                                     24,000                25,000
  Compensation costs related to stock 
    grants to directors                                25,000                   -
  Minority interest in loss
    of subsidiary                                      (5,000)              (54,000)
  Other                                                 5,000                   -
  (Increase) decrease in operating
    assets net of operating liabilities               (82,000)              103,000
                                                  -----------           ------------

  Cash Provided by (Used in) Operating
    Activities                                       (990,000)              103,000
                                                  -----------           ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment                   (120,000)             (203,000)
Proceeds from sale of assets                           17,000                   -
                                                  -----------           ------------
  Cash used in investing activities                  (103,000)             (203,000)
                                                  -----------           ------------
                                                     
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock                    786,000                   -
Purchase of certificate of deposit                        -                (150,000)
Exercise of stock options                                 -                  52,000
Purchase of common stock                                  -                 (84,000)
Payments on capital lease obligations                 (44,000)              (56,000)
Minority Interest Contributions                           -                  59,000
                                                  -----------           ------------

  Cash Provided by(Used in) Financing
    Activities                                        742,000              (179,000)
                                                  -----------           ------------

Decrease in cash                                     (351,000)             (279,000)

Cash and cash equivalents beginning
  of year                                             524,000               803,000
                                                  -----------           ------------

Cash and cash equivalents, end of year            $   173,000           $   524,000
                                                  -----------           ------------
                                                  -----------           ------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      30

<PAGE>

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

<TABLE>
<CAPTION>
                                        YEARS ENDED DECEMBER 31,
                                       -------------------------
                                          1998           1997
                                       ---------       ---------
<S>                                    <C>             <C>
Decrease (increase) in operating
  assets net of operating liabilities

  Trade receivables                    $ (26,000)      $    -
  Other current assets                  (120,000)        (58,000)
  Other assets                            (9,000)         18,000
  Income tax payable                        -            (19,000)
  Accounts payable and accrued
    liabilities                           73,000         162,000
                                       ---------       ---------
Total - net                            $ (82,000)      $ 103,000
                                       ---------       ---------
                                       ---------       ---------
</TABLE>


See accompanying notes to consolidated financial statements.


                                      31


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



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Barringer Laboratories, Inc., (the "Company") is an analytical services 
company, principally engaged in analytical testing for the environmental 
services and mineral exploration industries.

MANAGEMENT'S PLAN

The Company's operating plan for the next twelve months will concentrate 
heavily 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, over the balance of 1999, 
the Company's operating activities, plus the necessary investments to rebuild 
Mineral Division sales, will require additional funding of approximately 
$500,000.

The Company is addressing this funding requirement in several ways. 
Management believes that $150,000 can be made available through the release 
of a 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. The Company is currently 
negotiating to replace the Certificate of Deposit with a bond. 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 (mentioned above) 
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.

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 intercompany balances 
and transactions have been eliminated.

                                       32
<PAGE>

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

PRINCIPAL MARKETS

Sales of services are primarily to customers located in the United States, 
with the balance of approximately 36% to customers in Mexico, Nicaragua, Peru 
and Spain (See Notes 11 and 12). For the year ended December 31, 1998 based 
upon total sales, 6% of the Company's Environmental Division Services were 
provided under contracts relating to federal government spending for 
environmental enforcement and restoration.

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.

FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION

The carrying amounts of financial instruments including cash equivalents, 
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 capital lease obligations is not significant.

Credit risk represents the accounting loss that would be recognized at the 
reporting date if counterparties failed to completely perform as contracted. 
Concentrations of credit risk, whether on or off the balance sheet, that 
arise from financial instruments exist for groups of customers or groups of 
counterparties when they have similar economic characteristics that would 
cause their ability to meet contractual obligations to be similarly effected 
by changes in economic or other conditions.

Concentrations of credit risk with respect to trade receivables are generally 
limited due to customers being dispersed across geographic areas. Ongoing 
credit evaluations of customers' financial condition are performed and, 
generally no collateral is required. The Company maintains an allowance for 
potential losses based on management's analysis of possible uncollectible 
accounts (See Note 12).

                                       33
<PAGE>

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

SALES OF ACCOUNTS RECEIVABLE

The Company has adopted Statement of Financial Accounting Standards ("SFAS") 
125, "Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities". SFAS 125 provides consistent standards for 
distinguishing transfers of financial assets that are sales from transfers 
that are secured borrowings. Under SFAS 125, after a transfer of financial 
assets, an entity recognizes the financial and servicing assets it controls 
and the liabilities it has incurred, derecognizes financial assets when 
control has been surrendered, and derecognizes liabilities when extinguished.

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.

PROPERTY, EQUIPMENT, DEPRECIATION AND AMORTIZATION

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 the leased equipment.

Depreciation expense for the years ended December 31, 1998 and 1997, was 
$180,000 and $254,000, respectively.

LONG-TERM ASSETS

The Company applies SFAS 121, "Accounting for the Impairment of Long-Lived 
Assets". Under SFAS 121, long-lived assets and certain intangibles are 
evaluated for impairment when events or changes in circumstances indicate 
that the carrying value of the assets may not be recoverable through the 
estimated undiscounted future cash flows resulting from the use of these 
assets. When any such impairment exists, the related assets will be written 
down to fair value.

                                       34
<PAGE>

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

INCOME TAXES

The Company accounts for income taxes under SFAS 109 "Accounting for Income 
Taxes". Accordingly, deferred tax liabilities and assets are determined based 
on temporary differences between the tax basis of assets and liabilities and 
their reported amounts in the financial statements that will result in 
taxable or deductible amounts in future years using the enacted tax rates in 
effect for the year in which the differences are expected to reverse.

REVENUE RECOGNITION

Sales are recorded in the periods that services are performed. Revenue is 
recognized when sample testing is completed and a report is issued. Where 
contracts provide for testing of multiple samples at varying times, revenue 
is recognized on a per sample basis when sample testing for a batch is 
completed and the report is issued.

STATEMENTS OF CASH FLOWS

For purposes of the Statements of Cash Flows, the Company considers cash and 
all highly liquid investments with an original maturity of three months or 
less to be cash and cash equivalents.

LOSS PER SHARE

The Company follows the provisions 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 losses 
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 would be anti-dilutive. For the 
years ended December 31, 1998 and 1997, 191,600 and 176,975 dilutive common 
equivalent shares of common stock were not included in the computation of 
diluted loss per share because their effect was anti-dilutive.

STOCK OPTION PLANS

The Company applies Accounting Principal Board Opinion ("APB") 25, "Accounting 
for Stock Issued to Employees", and related Interpretations in accounting for 
all stock option plans. Under APB 25, no compensation cost has been 
recognized for stock options issued to employees as the exercise price of the 
Company's stock options granted equals or exceeds the market price of the 
underlying common stock on the date of grant.

                                       35
<PAGE>

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

SFAS 123, "Accounting for Stock-Based Compensation", requires the Company to 
provide pro forma information regarding net income (loss) as if compensation 
cost for the Company's stock option plans had been determined in accordance 
with the fair value based method prescribed in SFAS 123.

COMPREHENSIVE INCOME

During 1998 the Company adopted SFAS 130, "Reporting Comprehensive Income". 
Comprehensive income is comprised of net income and all changes to the 
statements of shareholders' equity, except those due to investment by 
shareholders, changes in paid-in-capital and distributions to shareholders. 
The adoption of SFAS 130 does not impact the Company's financial statements 
for the years ended December 31, 1998 and 1997.

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.

RECLASSIFICATIONS

Certain amounts in prior year financial statements have been reclassed to 
conform with current year presentation.

                                       36
<PAGE>

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

2.  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 (see Note 8). 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 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.

The results of operations of Shasta are included in the accompanying 
financial statements from the date of acquisition. The following unaudited 
pro forma financial information assumes the acquisition had occurred on 
January 1 of each year:

PRO FORMA INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except per share date)           1998      1997
                                              -------    ------
<S>                                           <C>        <C>
Sales of Services                             $ 6,615    $8,297
Net income (loss)                             $(1,332)   $  139
Net income (loss) per share:
  Basic                                       $  (.55)   $  .08
  Diluted                                     $  (.55)   $  .07
</TABLE>

The unaudited pro forma results do not necessarily represent results which 
would have occurred if the acquisition had taken place on the basis assumed 
above, nor are they indicative of the results of future combined operations.

                                       37
<PAGE>

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


3.  CERTIFICATE OF DEPOSIT

The certificate of deposit is security for the $150,000 letter of credit 
required by the Colorado Department of Health to support the Company's 
Radiochemistry license. This license is a regulatory requirement for any 
company engaged in the analysis of radioactive materials.

4.  SALE OF ACCOUNTS RECEIVABLE

During 1998 the Company sold approximately $101,000 of its accounts 
receivable to an independent factoring company under an agreement for 
approximately $80,000 which reflects a 20% retainage. Pursuant to the 
provisions of SFAS 125, the Company reflected 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. In January 1999, the Company 
received the retained share of these receivables.

5.  OBLIGATIONS UNDER CAPITAL LEASE

The obligations under capital lease consist of the following:

<TABLE>
<CAPTION>
                                             December 31,
                                      -------------------------
                                         1998            1997
                                      ---------        --------
<S>                                   <C>              <C>
Obligations under capital lease       $ 145,000        $ 92,000

  Less current maturities                74,000          38,000
                                      ---------        --------
                                      $  71,000        $ 54,000
                                      ---------        --------
                                      ---------        --------
</TABLE>

As of December 31, 1998, future net minimum lease payments under capital 
lease obligations are as follows:
<TABLE>
<S>                                             <C>
              1999                              $ 87,000
              2000                                48,000
              2001                                32,000
                                                --------

Total minimum lease payments                     167,000
Less amounts representing interest                21,000
Less amounts representing executory costs          1,000
                                                --------

Present value of net minimum lease payments     $145,000
                                                --------
                                                --------
</TABLE>

                                       38
<PAGE>

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

6.  MINORITY INTEREST

The minority interest represents the net value of the Peruvian minority 
shareholder's investment in the Company's Peruvian subsidiary. The December 
31, 1997 net value consists of the minority shareholder's original investment 
of $59,000 less their share in the 1997 loss of the Company's Peruvian 
subsidiary of $54,000 . In 1998, $5,000 of Peruvian losses were charged 
against the minority shareholders' investment, and the remainder were 
included in Net Loss.

7.  INCOME TAXES

Sources of loss before income taxes and after minority interest in loss of 
subsidiary include:
<TABLE>
<CAPTION>

                                    1998            1997
                                -----------     ------------
<S>                             <C>             <C>
  United States operations      $  (993,000)    $   (82,000)
  Foreign operations               (403,000)       (230,000)
                                -----------     ------------
                                $(1,396,000)    $  (312,000)
                                -----------     ------------
                                -----------     ------------
</TABLE>

The provision for income taxes for the years ended December 31, consisted of 
the following:
<TABLE>
<CAPTION>
                                       1998           1997
                                    ---------      ---------
<S>                                 <C>            <C>
  Current:
    Federal                         $   -          $   -
    State                               -              -

  Deferred Benefit:
    Federal                          (302,000)       (25,000)
    State                             (24,000)        (7,000)
                                    ---------      ---------
                                     (326,000)       (32,000)

  Increase in
    valuation allowance               326,000         32,000
                                    ---------      ---------
                                    $   -          $   -
                                    ---------      ---------
                                    ---------      ---------
</TABLE>

                                       39
<PAGE>

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

The significant components of deferred income tax benefit consisted of the 
following:

<TABLE>
<CAPTION>

                                       1998           1997
                                    ---------      ---------
<S>                                 <C>            <C>
Net operating
  loss carryforwards                 (327,000)     $  23,000
Expense accruals                      ( 3,000)       (28,000)
Depreciation and amortization           8,000        (10,000)
Other                                 ( 4,000)       (17,000)
                                    ---------      ---------

Deferred income tax benefit         $(326,000)     $ (32,000)
                                    ---------      ---------
                                    ---------      ---------
</TABLE>

The following summary reconciles income taxes at the United States statutory 
rate of 34% in 1998 and 1997 with the actual taxes:
<TABLE>
<CAPTION>

                                     1998          1997
                                  ---------     ---------
<S>                               <C>           <C>
Federal benefit computed
  at the statutory rate           $(475,000)    $(106,000)
Losses for which no tax
  benefit has been recognized       169,000        61,000
Valuation allowance                 326,000        32,000
Other                               (20,000)       13,000
                                  ---------     ---------

Provision for income taxes        $    -        $    -
                                  ---------     ---------
                                  ---------     ---------
</TABLE>

Temporary differences between the financial statement carrying amounts and 
the tax basis of assets and labilities that give rise to significant portions 
of the net deferred tax asset relate to the following:
<TABLE>
<CAPTION>

                                           1998           1997
                                       -----------     -----------
<S>                                    <C>             <C>
Tax operating loss carryforwards       $ 1,586,000     $ 1,259,000
Property and equipment, principally
  due to differences in depreciation       162,000         170,000
Expense accruals                            57,000          54,000
Other                                       62,000          58,000
                                       -----------     -----------
                                         1,867,000       1,541,000
Valuation allowance                     (1,837,000)     (1,511,000)
                                       -----------     -----------

Net deferred tax asset                 $    30,000     $    30,000
                                       -----------     -----------
                                       -----------     -----------
</TABLE>

At December 31, 1998 and 1997, the net deferred tax asset recorded is 
included in prepaid expenses and other in the accompanying consolidated 
balance sheets. As of December 31, 1998 and 1997, 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.

                                       40
<PAGE>

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


At December 31, 1998, 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 $4,285,000. 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.

8.  SHAREHOLDERS' EQUITY

STOCK GRANTED TO MANAGEMENT

During 1997, the Company granted a former member of management under a 
cashless exercise of 16,636 shares of common stock in exchange for 25,000 
non-qualified stock options held by the former member of management to 
purchase common stock at $.90 per share. No compensation expense was recorded 
related to this transaction.

PURCHASE OF MANAGEMENT STOCK

During 1997, the Company purchased 35,143 shares of common stock at $2.00 a 
share and purchased 8,000 shares of common stock at $1.75 per share from 
former members of management.

RETIREMENT OF TREASURY STOCK

Effective October 24, 1997, the Company retired 88,260 shares of its common 
stock valued at $103,000.

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 a stock subscription receivable of 
$255,000 to provide additional working capital. Subsequent to December 31, 
1998, all stock subscriptions receivable were collected and the shares of 
common stock were issued.

                                       41
<PAGE>

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


The shares were issued at prices less than the market price per share on the 
effective dates. The difference between the per share transaction prices, as 
adjusted for dilution, and the issuance price has been recorded as a $183,000 
and a $92,000 noncash charge, respectively, and are included in Selling, 
General and Administrative Expenses in the Consolidated Statements of 
Operations for the year ended December 31, 1998.

Among the subscribers of the two placements are three members of the 
Company's board of directors, two of whom are already significant 
shareholders. The Company claims exemption from registration under Section 4(2)
of the Securities Act of 1933, as amended.

STOCK GRANTED TO DIRECTORS

In December 1998, the Company granted 100,000 shares of its common stock to 
outside directors in consideration for 1998 directors' fees. The Company 
recorded compensatory expense of $25,000 in 1998 based upon the approximate 
market price per share at date of grant. The shares of common stock were 
issued in February 1999.

PREFERRED STOCK

The Preferred Stock of the Company can be issued in series. With respect to 
each series issued, the Board of Directors of the Company will determine, 
among other things, the number of shares in the series, voting rights and 
terms, dividend rates and terms, liquidation preferences and redemption and 
conversion privileges. There was no preferred stock outstanding at December 31,
1998 and 1997.

CONTINGENT STOCK

In connection with the acquisition of Shasta, the Company will issue 
additional shares of common stock, not to exceed 150,000 shares in the event 
that certain sales goals are met (see Note 2).

                                       42
<PAGE>

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

9.  STOCK OPTIONS AND WARRANTS

The following table sets forth the number of shares of common stock that are 
reserved as of December 31, 1998 for all outstanding options and warrants.
<TABLE>
<CAPTION>

                              Exercise,          Common Stock
                            Conversion or       Outstanding or
     Security               Option Price     Reserved for Issuance
----------------------      -------------    ---------------------
<S>                         <C>              <C>
Common Stock                                       3,407,315
Stock to be Issued                                 3,155,556
Stock Options (a)
                                 $ .50                25,000
                                 $ .90                 3,600
                                 $1.00                58,000
Warrants (b)
  Nassau Group Warrants          $1.06                80,000
    expiring five years          $1.25                25,000
    after issuance                                 ---------

Total                                              6,754,471
                                                   ---------
                                                   ---------
</TABLE>

(a)  STOCK OPTIONS

At December 31, 1998, the Company has four stock option plans, which are 
described below. The Company applies APB 25, "Accounting for Stock Issued to 
Employees", and related Interpretations in accounting for all plans. Under 
APB 25, no compensation cost has been recognized for stock options issued to 
employees as the exercise price of the Company's stock options granted equals 
or exceeds the market price of the underlying common stock on the date of 
grant.

1989 INCENTIVE STOCK OPTION PLAN

The 1989 Incentive Stock Option Plan (the "Plan") is designed to provide 
incentives for employees who may or may not be key employees, as well as 
officers and directors who are also employees of the Company and its 
subsidiaries, by providing up to 200,000 shares of the Company's common stock 
issuable pursuant to grants.

                                       43
<PAGE>

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

The Plan is administered by a Committee of at least three directors appointed 
by the Board of Directors. The Committee is authorized to determine the 
individuals to whom, and the times at which, options will be granted, the 
number of shares subject to each grant, the applicable restriction period, 
the purchase price for the shares subject to the option, and to specify such 
other terms and provisions of any grants of options as it deems necessary or 
advisable. However, the term of the options may not be for more than five 
years and the purchase price per share shall not be less than the market 
value of such shares at the time of grant. Additionally, options granted 
under the Plan typically vest 60% after two years of continuous employment of 
the optionee after the date of grant and 20% each year of continuous 
employment thereafter. During 1998, no options were exercised. During 1997, 
options to purchase 43,400 shares of common stock at $.90 per share were 
exercised. At December 31, 1998 and 1997, options to purchase 3,600 and 
5,600, respectively, shares of common stock are exercisable under this plan.

The Plan will terminate in December 1999, except for outstanding options 
under the Plan, which will remain in effect until they have been exercised or 
shall have been expired by their terms.

1997 LONG-TERM INCENTIVE PLAN

Stockholders approved the 1997 Long-Term Incentive Plan ("1997 Plan"). The 
1997 Plan is designed to provide key management employees of the Company 
with added incentives to continue in the long-term service of the Company and 
to create in such employees a more direct interest in the future success of 
the Company by relating compensation to increases in shareholder value, so 
that the income of key management employees is more closely aligned with the 
income of the shareholders of the Company. The 1997 Plan is also designed to 
attract key employees and to retain and motivate participating employees by 
providing an opportunity for investment in the Company. The 1997 Plan is 
administered by the Board of Directors or through an Incentive Plan Committee 
appointed by the Board of Directors and consisting of not less than two 
persons, all of whom must be non-employee directors. The 1997 Plan reserves 
120,000 shares of the Company's common stock for issuance. Any shares that 
are the subject of an award under the 1997 Plan which have lapsed or expired 
unexercised or unissued will automatically become available for reissue under 
the 1997 Plan. The exercise prices, vesting schedules, and other pertinent 
terms of the 1997 Plan will be determined by the Committee, but no exercise 
price for an incentive stock option will be less than the fair market value 
of the stock on the date the option is granted. There were no options granted 
under this plan in 1998 and 1997.

                                       44
<PAGE>

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

OTHER STOCK OPTIONS

The Company also grants non-qualified stock options to management, outside 
directors, and consultants as authorized by the Board of Directors. These 
options are exercisable at varying times from date of grant and expire five 
years from date of grant. As of December 31, 1998, all non-qualified stock 
options have been granted at an exercise price at or in excess of the current 
market value at the time of grant.

Non-qualified stock options to purchase 22,500 shares of common stock at 
$1.00 were canceled in 1997 and non-qualified stock options to purchase 
10,000 shares of common stock at $1.00 were exercised in 1997. Also during 
1997, 25,000 non-qualified stock options held by a former member of 
management to purchase common stock at $.90 per share were exchanged for 
16,636 shares of common stock under a cashless exercise. During 1998, stock 
options to purchase 81,500 shares expired and were cancelled and stock 
options to purchase 25,000 shares of common stock at an exercise price of 
$.50 per share were granted. Of the 25,000 stock options, 7,500 vested 
immediately; 7,500 will vest on January 27, 2000, and 10,000 vest 20% per 
year until June 1, 2003. As of December 31, 1998 and 1997, non-qualified 
stock options to purchase 37,500 and 101,500 shares of common stock, 
respectively, were exercisable.

NON-EMPLOYEE DIRECTORS PLAN

Stockholders approved the Non-Employee Directors Stock Option Plan (the 
"Non-Employee Directors Plan"). The Non-Employee Directors Plan provides for 
the grant of stock options to non-employee directors of the Company and its 
affiliated corporations in order to encourage and provide incentives for high 
level performance by the non-employee directors of the Company. The maximum 
number of shares of common stock that may be subject to stock options under 
the Non-Employee Directors Plan is 30,000 shares. Upon adoption of the 
non-Employee Directors Plan or upon initial election or appointment of a 
non-employee director to the Board of Directors of the Company, he or she 
shall be granted a stock option to purchase 1,000 shares of common stock. In 
addition, each non-employee director shall be granted a stock option to 
purchase 1,000 shares of common stock effective as to each anniversary date 
of the initial grant of a stock option to such director. Each stock option 
granted under the Non-Employee Directors Plan shall be vested one-third on 
the date of grant, one-third upon the first yearly anniversary date of a 
grant and the final one-third upon the second yearly anniversary date of the 
grant. The purchase price per share of common stock for the shares to be 
purchased pursuant to the exercise of a stock option will be 100% of the fair 
market value of the common stock on the date of grant of the option. No 
options granted under this plan in 1998 or 1997.

                                       45
<PAGE>

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

(b)   WARRANTS

In May 1996, the Company granted to certain individuals associated with The 
Nassau Group, Inc. (a director of the Company is also Managing Director of 
Nassau) warrants to purchase 80,000 shares and 25,000 shares of common stock 
at $1.06 and $1.25 per share, respectively, as an inducement to such 
individuals to become involved in the Company and also an inducement to 
purchase 10% of the outstanding shares of the Company's common stock. Such 
warrants are exercisable for a period of five years from the date of grant. 
Of the total warrants granted, warrants to purchase 50,000 shares of common 
stock vested when granted and the remaining warrants vest on a monthly basis 
over a one year period.

At December 31, 1998 and 1997, warrants to purchase 105,000 shares of common 
stock were issued and exercisable under the agreement.

In March 1998, the Company entered into an agreement whereby contingent 
warrants to purchase 10,000 shares of the Company's common stock will be 
granted at an exercise price equivalent to the average trading price of the 
Company's common stock in the 30 days prior to that date. The warrants are 
contingent upon the legal settlement of the Company's EPA investigation, 
which was settled in March 1999 (see Note 10). The warrants are exercisable 
for a three year period from that date.

(c)  STOCK APPRECIATION RIGHTS

In March 1998, the Company granted Stock Appreciation Rights ("SAR's") on 
30,000 shares of the Company's common stock to a non-employee. 20,000 of the 
SAR's are contingent upon the successful completion of certain objectives and 
the remaining 10,000 SAR's vest immediately. The base price of the SAR's are 
$.51 per share with the maximum stock appreciation attaching to the SAR's of 
$1.50 per share. The SAR's expire in March 2000. During 1998, the Company's 
stock price per share did not exceed the SAR's base price of $.51 per share 
and therefore the Company did not recognize any compensation expense.

                                       46

<PAGE>

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

SFAS 123, "Accounting for Stock-Based Compensation", requires the Company to
provide pro forma information regarding net loss as if compensation costs for
the Company's stock option plans had been determined in accordance with the fair
value based method prescribed in SFAS 123. The Company estimated the fair value
of each stock option at the grant date by using the Black-Scholes option-pricing
model with the following weighted-average assumptions used:

<TABLE>
<CAPTION>

                                          YEARS ENDED DECEMBER 31,
                                             1998          1997
                                          ------------------------
      <S>                                <C>              <C>
        Dividend Yield                        0%             -
        Expected volatility                 153%             -
        Risk-Free interest rates            5.5%             -
        Expected lives in years              5 years         -

</TABLE>

There were no options or warrants granted during 1997.

Under the accounting provisions of SFAS 123, the Company's net loss and net loss
per share would have been adjusted to the following pro forma amounts:

<TABLE>
<CAPTION>

                                     YEARS ENDED DECEMBER 31,
                                   1998                  1997
                                ----------            ----------
<S>                         <C>                     <C>
NET LOSS:
  As reported                $  (1,396,000)          $  (312,000)
  Pro forma                     (1,407,000)             (343,000)

NET LOSS PER SHARE:
  Basic
    As reported              $        (.57)          $      (.20)
    Pro forma                $        (.58)          $      (.22)

  Diluted
    As reported              $        (.57)          $      (.20)
    Pro forma                $        (.58)          $      (.22)

</TABLE>

                                      47

<PAGE>

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

A summary of the status of the Company's stock option plans and outstanding
warrants as of December 31, 1998 and 1997 and changes during the years ended on
those dates is presented below:

<TABLE>
<CAPTION>

                                              1998                             1997
                                   ---------------------------      ----------------------------
                                                      Weighted                          Weighted
                                                       Average                           Average
                                                      Exercise                          Exercise
                                   Shares              Price         Shares              Price
                                   ------             -------        ------             --------
<S>                               <C>               <C>            <C>                <C>
Outstanding                        248,100           $   1.05        443,000           $   1.04
  Granted                           25,000                .50            -                  -
  Exercised                            -                  -          (53,400)               .92
  Canceled                         (81,500)              1.01       (141,500)              1.08
                                   -------           --------       --------           --------
Outstanding,
    end of year                    191,600           $    .99        248,100           $   1.05
                                   -------           --------       --------           --------
                                   -------           --------       --------           --------
Options and warrants
    exercisable, end
    of year                        162,900           $   1.04        204,600           $   1.06
                                   -------           --------       --------           --------
                                   -------           --------       --------           --------
Weighted average fair
    value of options
    and warrants granted
    during the year               $    .50                             $ -         
                                  --------                          --------
                                  --------                          --------

</TABLE>

The following table summarizes information about stock options and warrants 
outstanding at December 31, 1998 and 1997.

<TABLE>
<CAPTION>
                                                            Options/Warrants
                      Options/Warrants Outstanding             Exercisable
                ---------------------------------------   ---------------------
                                Weighted
                                 Average      Weighted                  Weighted
  Range of                      Remaining      Average                  Average
  Exercise        Number       Contractual     Exercise     Number      Exercise
   Prices       Outstanding       Life          Price     Exercisable     Price
------------    -----------    -----------    ---------   -----------    -------
<S>            <C>            <C>            <C>         <C>           <C>
December 31, 1998
$       .50        25,000       4.6 years       $ .50         7,500       $ .50
$ .90-$1.06       141,600       2.2 years       $1.04       130,400       $1.04
      $1.25        25,000       3.2 years       $1.25        25,000       $1.25
                 ---------                                 ---------
$ .50-$1.25       191,600       2.7 years       $ .99       162,900       $1.05
                 ---------                                 ---------
                 ---------                                 ---------

December 31, 1997
$ .90-$1.06       223,100       2.5 years       $1.03       179,600       $1.03
      $1.25        25,000       4.2 years       $1.25        25,000       $1.25
                 ---------                                 ---------
$ .90-$1.25       248,100       2.7 years       $1.05       204,600       $1.06
                 ---------                                 ---------
                 ---------                                 ---------
</TABLE>

                                      48

<PAGE>

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

The weighted average grant date fair value of stock options and warrants granted
is summarized as follows:

<TABLE>
<CAPTION>

                                       YEARS ENDED DECEMBER 31,
                                         1998          1997
                                        ------        ------
<S>                                    <C>           <C>
Market value equal to exercise
  price                                 $   -         $  -

Market value greater than exercise
  price                                    0.56          -

Market value less than exercise
  price                                    0.41          -

</TABLE>

10.  COMMITMENTS AND CONTINGENCIES

(a)  LEASE COMMITMENTS

The Company rents office and laboratory facilities, and equipment under various
operating leases. Total rental expenses under such leases amounted to $723,000
and $715,000 for the years ended December 31, 1998 and 1997, respectively. At
December 31, 1998, future minimum rental payments required under operating
leases that have initial or remaining noncancellable terms in excess of one year
are as follows:

<TABLE>

      <S>                                <C>
       Year ending December 31, 1999      $  660,000
                                2000         371,000
                                2001         228,000
                                          ----------
                                          $1,259,000
                                          ----------
                                          ----------

</TABLE>

(b)  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.

                                      49

<PAGE>

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

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, 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.

(c) EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with the Operations 
Director of the Reno, NV laboratory for a period of two years commencing 
November 24, 1998 at an annual base salary of $65,000 with potential for 
bonuses and increases in the base salary at the end of 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 Company has entered into an agreement with a finance and accounting 
independent contractor which includes compensation of $2,500 per week. Also 
included is a cash bonus incentive and Stock Appreciation Rights for 30,000 
shares of the Company's common stock upon completion of agreed upon 
assignments and warrants to purchase 10,000 shares of the Company's common 
stock upon settlement of the EPA investigation.

(d) EMPLOYEE RETIREMENT PLAN

In 1994, the Company established a tax-qualified 401(k) cash or deferred
compensation plan that covers all employees of the Company who have completed
one year of service and attained age 21. Participants are permitted, within the
limitations imposed by the Internal Revenue Code of 1954, as amended, to make
pretax contributions. Participants are always fully vested in their accounts
under the Plan. The Company makes matching contributions equal to 100% of the
first 2% of an employee's salary and 50% of the next 5% of an employee's salary,
which contributions vest in the employee proportionately over a period of six
years. During 1998 and 1997, the Company contributed $47,701 and $52,476, 
respectively, to the plan.

11.  MAJOR CUSTOMERS

Three customers accounted for more than 10% individually and approximately 
40% in the aggregate of the Company's total revenue in 1998 (see Note 12). In 
1997, no single customer accounted for more than 10% of the Company's total 
revenues.

                                       50

<PAGE>

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

12. BUSINESS SEGMENTS AND GEOGRAPHIC AREA INFORMATION

In 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of an 
Enterprise and Related Information".  Disclosures required by SFAS No. 131 
are as follows (in thousands $):

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 and
related information for the years ended December 31, 1998 and 1997, is as
follows (in thousands $):

<TABLE>
<CAPTION>

                                  1998               1997
                                 ------             ------
<S>                             <C>               <C>
Environmental
 Sales of Services               $ 3,681           $ 4,042
 Costs and Expenses              $ 3,208           $ 3,625
 Operating Profit                $   473           $   417

Mineral
 Sales of Services               $ 2,559           $ 3,137
 Costs and Expenses              $ 2,868           $ 2,783
Operating                        $  (309)          $   354
  Profit(Loss)

Corporate
 Costs and Expenses              $ 1,587           $ 1,068
 Operating Loss                  $(1,587)          $(1,068)

Consolidated
 Sales of Services               $ 6,240           $ 7,179
 Costs and Expenses              $ 7,663           $ 7,476
 Operating Loss                  $(1,423)          $  (297)

</TABLE>

                                      51

<PAGE>

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

A summary of the Company's operations by geographic area for the years ended
December 31, 1998 and 1997, is as follows:

<TABLE>
<CAPTION>

                                      1998              1997
                                     ------            ------
<S>                               <C>              <C>
Total sales of services
  United States                    $3,941,000       $5,273,000
  Mexico                              503,000          685,000
  Nicaragua                         1,122,000          599,000
  Peru                                177,000          154,000
  Spain                               380,000          464,000
  Colombia                            117,000            4,000
                                   ----------       ----------
Total                              $6,240,000       $7,179,000
                                   ----------       ----------
                                   ----------       ----------

Loss from operations
  before income taxes and after
  minority interest in loss of
  subsidiary
    United States (includes loss
    for Spain and Colombia)        $ (993,000)      $  (82,000)
    Mexico                           (156,000)         (87,000)
    Nicaragua                         (82,000)         (35,000)
    Peru                             (165,000)        (108,000)
                                   ----------       ----------
Total                             $(1,396,000)      $ (312,000)
                                   ----------       ----------
                                   ----------       ----------
Long-Lived Assets
  United States                    $  260,000       $  216,000
  Mexico                               25,000           16,000
  Nicaragua                            23,000           11,000
  Peru                                 37,000           66,000
  Eliminations                        (17,000)         (17,000)
                                   ----------       ----------
Totals                             $  328,000       $  292,000
                                   ----------       ----------
                                   ----------       ----------

</TABLE>

During 1998, sales to three customers represented approximately $1,122,000, 
$721,000 and $652,000 of the Company's total sales. At December 31, 1998, 
accounts receivable from two of these customers totaled $196,000 and 
$114,000. For the year ended December 31, 1997, there were no such 
concentrations in sales or accounts receivable.

For the year ended December 31, sales from significant customers consisted of 
the following:

<TABLE>
<CAPTION>

                                               1998
                                               ----
        <S>                                   <C>
         A (Foreign sales)                     18.0%
         B                                     11.6%
         C                                     10.4%

</TABLE>

                                      52

<PAGE>

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


13.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

The Company made cash payments for interest of $9,000 and $17,000 in 1998 and
1997.

The Company made no cash payments for income taxes in 1998 and  $49,000 in 1997.

Supplemental disclosure of noncash investing and financing activities:

<TABLE>
<CAPTION>

                                                  Years Ended December 31,
                                                  ------------------------
                                                     1998          1997
                                                     ----          ----
      <S>                                         <C>            <C>
        Common stock issued for subscription
          receivable                               $255,000       $  -

        Common stock issued for acquisition
          of certain assets of Shasta
          Laboratories, Inc.                         39,000          -

        Capital lease obligations entered into
          for property and equipment                 97,000          -

        Common stock granted to Management              -          16,636

</TABLE>


14.  CORPORATE REALIGNMENT EXPENSE

The Company recorded severance costs and other expenses associated with changes
in management personnel in 1997 of $131,000.

                                       53

<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES



                                     PART II


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         CONSOLIDATED FINANCIAL DISCLOSURE


Not applicable.







                                      54

<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>

                                  Position with the Company      Director
        Name                           and affiliates             Since
        ----                      -------------------------      --------
<S>                              <C>                            <C>
J. Graham Russell..................Director, President and         1997
                                   Chief Executive Officer
                                   of the Company

R. Scott Asen......................Director of the Company         1996

Anthony R. Barringer...............Director of the Company         1991

J. Francis Lavelle.................Director of the Company         1996

C.F. Wasser, III...................Director of the Company         1991

</TABLE>

J. Graham Russell, 52, joined the Company as President, Chief Executive Officer,
and a Director on December 8, 1997. From January, 1995 until December 8, 1997,
Mr. Russell was an independent consultant to the environmental laboratory
industry. In February, 1996, he founded Chemical Management Services, L.L.C., an
innovative chemical recycling technology company. He remains a Principal and
majority owner of this company. Prior to January, 1995, Mr. Russell held a
number of executive positions with U.S based subsidiaries of The Ocean Group,
plc, a major British industrial services corporation, quoted on the London stock
exchange. His last assignment for The Ocean Group, plc, ran from January, 1985
until January, 1995, during which time he was President and CEO of National
Environmental Testing, Inc., which he built from start-up to the third largest
environmental testing company in the U.S. with revenues of nearly $50 million at
its peak. Mr. Russell is a British citizen. He has an MA in economic geography
from Cambridge University in the United Kingdom and an MBA from the Cranfield
Institute of Technology, one of Britain's largest business schools.


                                       55

<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III


R. Scott Asen, 54, is a Director of the Company. Mr. Asen has been general 
partner of Pioneer Associates, Pioneer III-A, Pioneer III-B and Pioneer IV, 
venture capital investment funds, since 1981, 1983, and 1984, respectively. 
Since 1983, Mr. Asen has been President of Asen and Co., Inc., an investment 
management firm. Presently, Mr. Asen is also a director of Davox Corporation, 
SeaMed Corporation and a number of privately held companies.

Dr. Anthony R. Barringer, 73, is a Director of the Company and the founder of 
Barringer Technologies, Inc. (BTI) for which he was President and later 
served as Chairman until he resigned in January, 1993, and Chief Executive 
Officer until January, 1989. Since November, 1989, Dr. Barringer has been the 
principal officer of Barringer Patents Inc., a technology development firm 
not in competition with the Company. Dr. Barringer is also Chairman and Chief 
Executive Officer of Barringer GeoSystems Inc., a company formed in August, 
1994 for the development of airborne geophysical systems. This firm is not in 
competition with the Company.

J. Francis Lavelle, 35, is a Director of the Company. Mr. Lavelle is the 
founder and, since 1992, a Managing Director of The Nassau Group, Inc. a 
boutique investment banking and strategic consulting firm which focuses on 
the environmental industry. Prior to establishing The Nassau Group, Mr. 
Lavelle was an executive with Baring Brothers & Co., Inc., a UK based firm, 
for five years, his last position being Vice President responsible for 
international and domestic mergers and acquisitions. Mr. Lavelle joined 
Baring Brothers from Booz, Allen & Hamilton where his fields of expertise 
were international merger and acquisition advice as well as business strategy 
development. He graduated CUM LAUDE from Princeton University after 
completing an A.B. degree at the Woodrow Wilson School of Public and 
International Affairs.

C.F. Wasser, III, 47, is a Director of the Company.  From December, 1982 to 
January, 1993, Mr. Wasser was Senior Vice President of Sales for Kidder 
Peabody & Co., Inc. in Minneapolis, Minnesota.  He served as a Senior Vice 
President for Paine Webber in Wayzata, Minnesota from January, 1993 to 
October 1995 and Senior Vice President - Investments for EVEREN Securities, 
Inc. in Minneapolis, Minnesota from October, 1995 to January, 1998.


                                      56

<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III


All five directors are elected by the holders of the Company's Common Stock to
serve one year terms or until their successors shall be elected and shall
qualify.

There are no family relationships between any of the directors and officers of
the Company.






                                      57

<PAGE>


                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III



ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth the total remuneration, on an accrued basis,
during the Company's last fiscal year ended December 31, 1998 for the Chief
Executive Officer and the executive officers whose total cash and non-cash
compensation exceeded $100,000 and for their prior two years remuneration.


                 SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                    Long Term Compensation
                                                                               ---------------------------------
                                                 Annual Compensation                   Awards           Payouts
                                         -----------------------------------   ----------------------   --------
                                                                     Other
                                                                     Annual      Restricted                            All Other
Name and                                                             Compen-       Stock                   LTIP         Compen-
Principal                                                            sation       Award(s)   Option/      Payouts       sation
Position                       Year(1)    Salary($)   Bonus($)        ($)          ($)      SARs(#)(2)      ($)        ($)(3)
--------                       -------    ---------   --------     -----------   --------   ----------   ----------    ----------
<S>                            <C>        <C>         <C>          <C>            <C>       <C>          <C>           <C>
J. Graham Russell               1998       155,000           -         N/A          N/A           -         N/A           N/A
President/CEO(4)                1997         7,692           -         N/A          N/A           -         N/A           N/A

John S. Lovell                  1998        90,000           -         N/A          N/A        15,000       N/A           N/A
Chief Technical                 1997        29,800           -         N/A          N/A           -         N/A           N/A
Officer and (5)
Secretary

Vern Peterson                   1998       104,501           -         N/A          N/A           -         N/A         3,734
Vice President(6)               1997        94,370        10,000       23,662       N/A        18,000       N/A         7,468
                                1996        82,597        23,662       N/A          N/A        18,000       N/A         7,468

Former Executive Officers

Robert H. Walker                1997       111,800           -         79,878       N/A           -         N/A        14,035
Former President                1996       111,800        44,364       N/A          N/A        60,000       N/A        13,733
and CEO (7)

Charles E. Ramsay               1997        73,942           -         19,465       N/A           -         N/A        10,416
Former Chief                    1996        70,500        23,101       N/A          N/A        12,000       N/A         9,751
Financial Officer (8)
</TABLE>


(1)  Periods presented are for the year ended December 31.

(2)  Number of shares of the Company's common stock subject to options granted
     during the year indicated.

(3)  Represents employer contributions for insurance, disability, 401K and a car
     allowance.

(4)  Mr. Russell joined the Company on December 8, 1997. Mr. Russell's salary
     for fiscal year 1998 was $155,000. Mr Russell's salary for fiscal year 1999
     is $110,000 cash and $15,000 in common stock.


                                   58


<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III


(5)  Dr. Lovell was acting president and CEO for the Company from September 22,
     1997 to December 7, 1997. Dr. Lovell is currently Chief Technical Officer
     and Secretary of the Company.

(6)  Other annual compensation for 1997 was a result of Mr. Peterson selling
     16,400 shares of common stock which he had acquired through exercising
     incentive stock options during 1997. Mr. Peterson's employment terminated
     with the Company on January 27, 1999.


(7)  Mr. Walker's employment terminated on October 16, 1997. Amounts shown as
     Other Annual Compensation consists of the following:

<TABLE>
             <S>                                 <C>
             16,636 shares of common             $44,751
             stock exchanged for 25,000
             non-qualified stock options

             Company buy-out of outstanding       18,175
             exercisable stock options 
             at $2.00 per option
             less option price
               25,000 options @ $.375
                8,000 options @ $1.10

             Company's buy-back of common 11,000 stock, which Mr. Walker
             acquired through exercised stock options in 1997, at $2,00 per
             share less option price
               10,000 shares @ $1.10

             Accrued Vacation                      5,952
                                                 -------
                  Total                          $79,878
                                                 -------
                                                 -------
</TABLE>


        Additionally, the Company continued to pay approximately $37,000 in
        salary and fringe benefits to Mr. Walker through April 16, 1998.


                                   59


<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III


 (8)    Mr. Ramsay's employment terminated on December 19, 1997. Amounts shown
        as Other Annual Compensation consist of the following:

<TABLE>
             <S>                                 <C>
             Accrued Vacation                    $ 7,225

             Company's buy-back of common          6,800
             stock, which Mr. Ramsay
             acquired through exercised
             stock options in 1997, at
             $1.75 less option price
               8,000 shares at $.85

             Company's buy-out of outstanding      5,400
             exercisable stock options 
             at $1.75 per option
             less option price
               6,400 option @ $.85
                                                 -------
                  Total                          $19,465
                                                 -------
                                                 -------
</TABLE>

Additionally, the Company continued to pay approximately $40,000 in salary and
fringe benefits to Mr. Ramsay through June 19, 1998.

Bonuses for Mr. Russell and other individuals are determined by the Compensation
Committee of the Board of Directors based on overall Company performance.


<TABLE>
<CAPTION>
                                        Option/SAR Grants in Last Fiscal Year
          -----------------------------------------------------------------------------------------
                                                    Individual Grants
          -----------------------------------------------------------------------------------------

                                 Number of
                                 Securities        % of Total
                                 Underlying        Options/SARs
                                 Options/          Granted to         Exercise
                                   SARs            Employees in       or Base            Expiration
          Name                    Granted           Fiscal Year      Price($/Sh)            Date
          -----------------------------------------------------------------------------------------
          <S>                     <C>               <C>              <C>                 <C>
          John S. Lovell          15,000               60%               $.50            06/01/2003
</TABLE>


                                   60


<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III



AGGREGATE OPTIONS EXERCISED IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998.

The following table sets forth certain information regarding options to purchase
shares of the Company's common stock exercised during the Company's 1998 fiscal
year and the number and value of exercisable and unexercisable options to
purchase shares of the Company's common stock held as of the end of the
Company's 1997 fiscal year by the executive officers of the Company named in the
Summary Compensation Table:


<TABLE>
<CAPTION>


            Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
        ------------------------------------------------------------------------------------------
                                                                                    Value of
                                                                  Number of        Unexercised
                                                                 Unexercised       In-the-Money
                                                                Options/SARs at   Options/SARs at
                                                                  FY-End(#)          FY-End($)
                             Shares Acquired       Value         Exercisable/      Exercisable/
              Name             on Exercise      Realized($)(1)   Unexercisable    Unexercisable(2)
         -----------------------------------------------------------------------------------------
         <S>                 <C>                <C>            <C>                <C>
         John S. Lovell            -                  -          7,500/7,500              N/A

         Vern K. Peterson          -                  -          12,400/7,200              N/A
</TABLE>

(1)  Value realized is equal to the difference between the fair market value per
     share of common stock on the date of exercise and the option exercise price
     per share multiplied by the number of shares acquired upon exercise of an
     option.

(2)  Value of exercisable/unexercisable in-the-money options is equal to the
     difference between the fair market value per share of common stock of $.25
     at December 31, 1998, and the option exercise price per share multiplied by
     the number of shares subject to options.


                                  61


<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III

STOCK OPTIONS

1989 INCENTIVE STOCK OPTION PLAN 1989

The 1989 Incentive Stock Option Plan (the "Plan") is designed to provide 
incentives for employees who may or may not be key employees, as well as 
officers and directors who are also employees of the Company and its 
subsidiaries, by providing up to 200,000 shares of the Company's common stock 
issuable pursuant to grants.

The Plan is administered by a Committee of at least three directors appointed 
by the Board of Directors. The Committee is authorized to determine the 
individuals to whom, and the times at which, options will be granted, the 
number of shares subject to each grant, the applicable restriction period, 
the purchase price for the shares subject to the option, and to specify such 
other terms and provisions of any grants of options as it deems necessary or 
advisable. However, the term of the options may not be for more than five 
years and the purchase price per share shall not be less than the market 
value of such shares at the time of grant. Additionally, options granted 
under the Plan typically vest 60% after two years of continuous employment of 
the optionee after the date of grant and 20% each year of continuous 
employment thereafter. During 1998, no options were exercised. During 1997, 
options to purchase 43,400 shares of common stock at $.90 per share were 
exercised. At December 31, 1998 and 1997, options to purchase 3,600 and 
5,600, respectively, shares of common stock are exercisable under this plan.

The Plan will terminate in December 1999, except for outstanding options under
the Plan, which will remain in effect until they have been exercised or shall
have been expired by their terms.

1997 LONG-TERM INCENTIVE PLAN

Stockholders approved the 1997 Long-Term Incentive Plan ("1997 Plan"). The 
1997 Plan is designed to provide key management employees of the Company 
with added incentives to continue in the long-term service of the Company and 
to create in such employees a more direct interest in the future success of 
the Company by relating compensation to increases in shareholder value, so 
that the income of key management employees is more closely aligned with the 
income of the shareholders of the Company. The 1997 Plan is also designed to 
attract key employees and to retain and motivate participating employees by 
providing an opportunity for investment in the Company. The 1997 Plan is 
administered by the Board of Directors or through an Incentive Plan Committee 
appointed by the


                                   62


<PAGE>


                BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                  PART III


Board of Directors and consisting of not less than two persons, all of whom 
must be non-employee directors. The 1997 Plan reserves 120,000 shares of the 
Company's common stock for issuance. Any shares that are the subject of an 
award under the 1997 Plan which have lapsed or expired unexercised or 
unissued will automatically become available for reissue under the 1997 Plan. 
The exercise 345prices, vesting schedules, and other pertinent terms of the 
1997 Plan will be determined by the Committee, but no exercise price for an 
incentive stock option will be less than the fair market value of the stock 
on the date the option is granted. There were no options granted under this 
plan in 1998 and 1997.

OTHER STOCK OPTIONS

The Company also grants non-qualified stock options to management, outside
directors, and consultants as authorized by the Board of Directors. These
options are exercisable at varying times from date of grant and expire five
years from date of grant. As of December 31, 1998, all non-qualified stock
options have been granted at an exercise price at or in excess of the current
market value at the time of grant.

Non-qualified stock options to purchase 22,500 shares of common stock at $1.00
were canceled in 1997 and non-qualified stock options to purchase 10,000 shares
of common stock at $1.00 were exercised in 1997. Also during 1997, 25,000
non-qualified stock options held by a former member of management to purchase
common stock at $.90 per share were exchanged for 16,636 shares of common stock
under a cashless exercise. During 1998, stock options to purchase 81,500 shares
expired and were cancelled and stock options to purchase 25,000 shares of common
stock at an exercise price of $.50 per share were granted. Of the 25,000 stock
options, 7,500 vested immediately; 7,500 will vest on January 27, 2000, and
10,000 vest 20% per year until June 1, 2003. As of December 31, 1998 and 1997,
non-qualified stock options to purchase 37,500 and 101,500 shares of common
stock, respectively, were exercisable.

NON-EMPLOYEE DIRECTORS PLAN

Stockholders approved the Non-Employee Directors Stock Option Plan (the
"Non-Employee Directors Plan"). The Non-Employee Directors Plan provides for the
grant of stock options to non-employee directors of the Company and its
affiliated corporations in order to encourage and provide incentives for high
level performance by the non-employee directors of the Company. The maximum
number of shares of common stock that may be subject to stock options under


                                   63


<PAGE>

               BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                 PART III


the Non-Employee Directors Plan is 30,000 shares. Upon adoption of the
non-Employee Directors Plan or upon initial election or appointment of a
non-employee director to the Board of Directors of the Company, he or she shall
be granted a stock option to purchase 1,000 shares of common stock. In addition,
each non-employee director shall be granted a stock option to purchase 1,000
shares of common stock effective as to each anniversary date of the initial
grant of a stock option to such director. Each stock option granted under the
Non-Employee Directors Plan shall be vested one-third on the date of grant,
one-third upon the first yearly anniversary date of a grant and the final
one-third upon the second yearly anniversary date of the grant. The purchase
price per share of common stock for the shares to be purchased pursuant to the
exercise of a stock option will be 100% of the fair market value of the common
stock on the date of grant of the option. No options granted under this plan in
1998 or 1997.

401(k) CASH OR DEFERRED COMPENSATION PLAN

In 1994, the Company established a tax-qualified 401(k) cash or deferred
compensation plan that covers all employees of the Company who have completed
one year of service and attained age 21. Participants are permitted, within the
limitations imposed by the Internal Revenue Code of 1954, as amended, to make
pretax contributions. Participants are always fully vested in their accounts
under the Plan. The Company makes matching contributions equal to 100% of the
first 2% of an employee's salary and 50% of the next 5% of an employee's salary,
which contributions vest in the employee proportionately over a period of six
years. Amounts accrued pursuant to the Plan for the benefit of executive
officers are included in the Summary Compensation Table under the column "All
Other Compensation". Prior to 1994, the Company was part of Barringer
Technologies Inc.'s tax qualified 401(k) plan.

COMPENSATION OF DIRECTORS

The non-employee directors were granted 25,000 shares of common stock plus
reimbursement of expenses in 1998. The shares of common stock were issued in
February 1999.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with the Operations 
Director of the Reno, NV laboratory for a period of two years commencing 
November 24, 1998 at an annual base salary of $65,000 with potential for 
bonuses and increases in the base salary at the end of 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 Company has entered into an agreement with a finance and accounting 
independent contractor which includes compensation of $2,500 per week. Also 
included is a cash bonus incentive and Stock Appreciation Rights for 30,000 
shares of the Company's common stock upon completion of agreed upon 
assignments and warrants to purchase 10,000 shares of the Company's common 
stock upon settlement of the EPA investigation.

                                   64


<PAGE>


               BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                 PART III





ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The following table sets forth, as of April 8, 1999, the number of outstanding
options and warrants included with the number of shares of common stock owned by
each officer and director of the Company and all directors and officers as a
group and any persons (including any "group" as used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known by the Company to own beneficially 5% or
more of such securities. As of April 8, 1999, there were 6,562,871 shares of the
Company's common stock issued and outstanding, 86,600 outstanding options to
purchase the Company's common stock, and 105,000 outstanding warrants to
purchase the Company's common stock.


<TABLE>
<CAPTION>

                                      Number of Shares    Percent
Name of Beneficial Owner              of Common Stock     of Class
------------------------              -----------------   --------
<S>                                   <C>                 <C>
J. Graham Russell....................      333,333          5.1
  Barringer Laboratories, Inc.
  15000 W. Sixth Ave., Suite 300
  Golden, Colorado 80401

John Lovell, PhD (8)                       146,389          2.2
  Barringer Laboratories, Inc.
  150000 W. Sixth Ave., Suite 300
  Golden, Colorado 80401

R. Scott Asen(1)(2)(3)(4)(5)(7)......    2,564,961         39.1
  Asen and Co., Inc.
  224 East 49th St.
  New York, NY 10017

Anthony R. Barringer(7)..............       62,000          1.0
  25060 Montane Drive West
  Golden, Colorado 80401

J. Francis Lavelle(6)(7).............    1,499,635         22.9
  The Nassau Group, Inc.
  18 Kings Hwy. North
  Westport, CT 06880
</TABLE>


                                   65


<PAGE>


              BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                PART III


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT (CONTINUED)


<TABLE>
<CAPTION>

                                      Number of Shares   Percent
Name of Beneficial Owner              of Common Stock    of Class
------------------------              -----------------  ---------
<S>                                   <C>                <C>
C.F. Wasser, III(5)(7)...............      166,438           2.5
  12290 Chinchilla Ct.
  Rosemont, Minnesota 55068

All directors and officers as a group
  consisting of six (6) persons......    4,772,756          72.7
</TABLE>
-------------------------------------

*Less than 1%

(1)  Includes 50,257 shares of the Company's common stock held by an account
     titled,"Dean Witter Reynolds C/F David V. Foster IRA Rollover dated
     2/17/95". Mr. Asen manages this account and disclaims beneficial ownership
     of all shares owned by this account.

(2)  Includes 128,333 shares of the Company's common stock held by an account
     titled,"Asen and Co., Inc. FBO SDFJ, Inc.". Mr. Asen manages this account
     and disclaims beneficial ownership of all shares owned by this account.

(3)  Includes 128,333 shares of the Company's common stock held by an account
     titled "Woodmere Count Investments". Mr. Asen manages this account and
     disclaims beneficial ownership of all shares owned by this account.

(4)  Includes 80,555 shares of the Company's common stock held by an account
     titled "Nicole Miller & Kim Taipale JT Ten". Mr. Asen manages this account
     and disclaims beneficial ownership of all shares owned by this account.

(5)  Includes 472,222 shares of the Company's common stock held by an account
     titled, "AB Associated LP". Mr. Asen manages this account and disclaims
     beneficial ownership of all shares owned by the partnership except those
     shares in which he has a pecuniary interest. That number of shares will be
     determined by the final performance of the partnership.


                                  66


<PAGE>

                  BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                    PART III

(6)  Includes 50,469 of the Company's warrants. The warrants were issued to Mr.
     Lavelle as an inducement to Mr. Lavelle to become involved in the Company
     and also an inducement to purchase 10% of the outstanding shares of the
     Company's common stock. Each warrant entitles Mr. Lavelle to purchase one
     share of the Company's common stock upon an average payment of $1.11. Each
     warrant is exercisable for a period of five (5) years after date of issue.
     As of December 31, 1998 and 1997, all warrants have been issued.

(7)  Includes 25,000 shares of common stock issued in 1998 in consideration of
     director's compensation.

(8)  Includes options to purchase 15,000 shares of the Company's common stock at
     $.50 per share. 7,500 of the options vest immediately and 7,500 options
     vest on January 27, 2000. At December 31, 1998, none of the options had
     been exercised.











                                67


<PAGE>

             BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                              PART III


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective April 30, 1992 the Company sold all the common stock of its Canadian
subsidiary, Barringer Laboratories, Ltd to Philip Environmental Ltd. The Company
used the net proceeds to repay $1,662,000 of short-term borrowings plus related
interest including the portion of such indebtedness which was due and owed
Barringer Technologies, Inc. ("BTI"), the Company's then largest stockholder.

Principal and interest under this agreement were originally due on May 31, 1994.
Interest was payable semi-annually at a bank's prime rate plus 2%. In 1994, BTI
made a $136,000 principal payment on its note due to the Company. Additionally,
BTI paid $93,000 to Philip Environmental on behalf of the Company. This payment
was related to the warranties, representations, and guarantees made by the
Company in the 1992 sale of the Company's Canadian subsidiary.

In connection with a new line of credit in 1994, the Company agreed to extend
BTI's note due date to May 31, 1995 for BTI's guarantee of the line of credit
and increase the interest on the note to a bank's prime rate plus 4% (12.5% at
December 31, 1994) payable monthly from a bank's prime rate plus 2% payable
semi-annually.

Effective December 13, 1995 under an agreement dated December 8, 1995, the
Company had purchased from BTI 647,238 shares of the Company's common stock for
$809,000, which consisted of a cash payment of $300,000 and cancellation of
intercompany obligations (note and intercompany Account Receivable) in the
amount of $509,000. Additionally, 88,260 shares of the Company's common stock
owned by BTI were placed in an escrow account, to be returned to BTI if the
Company's 1996 earnings were at least 13% higher than 1995 earnings. The
Company's 1996 earnings were not 13% higher than 1995 earnings, and therefore
the 88,260 shares were reverted back to the Company with a purchase price per
share of $1.10. BTI had agreed not to transfer its remaining 26% interest in the
Company until January 2, 1997, subject to certain conditions, and had agreed to
grant the Company a right of first refusal with respect to such shares until
January 2, 1997, subject to certain conditions. The Intercompany Agreement
between the Company and BTI was terminated on December 13, 1995.


                                  68


<PAGE>

             BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                PART III

BTI terminated all voting trusts, proxy arrangements, and all other arrangements
and agreements of any kind or nature to which it was a party under which it was
authorized to vote shares of the Company. BTI did not enter into any voting
trusts, proxy agreements, and any other agreements relating to shares of the
Company.

Effective October 28, 1996 under an Agreement dated October 7, 1996, BTI sold
all of its remaining ownership of the Company's common stock, net of the 88,260
escrowed shares of the Company's common stock which were returned to the
Company.

As of November 18, 1996 BTI sold all of its remaining ownership of the Company's
outstanding Common Stock.

Effective May 17, 1996, the Company entered into an exclusive agreement with The
Nassau Group, Inc. ("Nassau") of Westport, Connecticut, to provide the Company
with financial advisory services and investment banking support over the course
of the next two years. Nassau provides assistance in terms of evaluating
strategic growth and acquisition opportunities, evaluating financing
alternatives and helping to arrange for the Company's future capital needs. The
Company granted warrants to individuals associated with Nassau as an inducement
to such individuals to become involved in the Company and also an inducement to
purchase 10% of the outstanding shares of the Company's common stock. Such
warrants will be exercisable for a period of five years after date of issue and
entitle these individuals to purchase 80,000 shares and 25,000 shares of common
stock at $1.06 per share and $1.25 per share, respectively. Messrs. Lavelle and
Holmes, Directors of the Company, are principals of Nassau. In connection with
the Company's April 1998 financing described in Item 7, Nassau waived any
compensation rights which it may have had.

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.


                                   69


<PAGE>

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 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.

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.

The shares were issued at prices less than the market price per share on the
effective dates. The difference between the per share transaction prices, as
adjusted for dilution, and the issuance price has been recorded as a $183,000
and a $92,000 noncash charge, respectively, and are included in Selling, General
and Administrative Expenses in the Consolidated Statements of Operations for the
year ended December 31, 1998.

Among the subscribers of the two placements are three members of the Company's
board of directors, two of whom are already significant shareholders. The
Company claims exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.


                                  70


<PAGE>

             BARRINGER LABORATORIES, INC. AND SUBSIDIARIES

                                PART III

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K


        (a)    Exhibits.

               23.1 Consent of BDO Seidman, LLP


        (b)    REPORTS ON FORM 8-K.

               The following reports on Form 8-K were filed:

                    Asset Purchase Agreeement between Shasta Geochemistry
                    Laboratory, Inc. and Barringer Laboratories, Inc. filed on
                    December 17, 1998

                    Financial Statements of Business Acquired and Pro Forma
                    Financial Information filed on February 17, 1999







                                   71


<PAGE>


                                SIGNATURES


In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                         BARRINGER LABORATORIES, INC.

Date:  April 14, 1999

                         By: /s/ J. Graham Russell
                             ----------------------------
                             J. Graham Russell, President

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.


<TABLE>
<CAPTION>

SIGNATURE                     TITLES OR CAPACITIES            DATE
---------                     --------------------            ----
<S>                          <C>                         <C>
/s/ J. Graham Russell        Director, President and     April 14, 1999
------------------------     Chief Executive Officer
J. Graham Russell            (Principal Executive and
                             Financial Officer)

/s/ R. Scott Asen            Director                    April 14, 1999
------------------------
R. Scott Asen

/s/ Anthony R. Barringer     Director                    April 14, 1999
------------------------
Anthony R. Barringer

/s/ C.F. Wasser, III         Director                    April 14, 1999
------------------------
C.F. Wasser, III

/s/ J. Francis Lavelle       Director                    April 14, 1999
------------------------
J. Francis Lavelle
</TABLE>


                                  72


<PAGE>

                            INDEX TO EXHIBITS


<TABLE>
<CAPTION>
                                                 Page
                                                 ----
<S>                                              <C>
Exhibit 23.1   Consent of BDO Seidman, LLP.       76
</TABLE>










                                   73


<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                             BARRINGER LABORATORIES, INC.

Date:  April 14, 1998

                             By: /s/ J. Graham Russell
                                 ---------------------------
                                 J. Graham Russell, President

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>

Signature                Titles or Capacities      Date
---------                --------------------      ----
<S>                      <C>                       <C>

/s/J. Graham Russell     Director, President and   April 14, 1999
----------------------   Chief Executive Officer
J. Graham Russell        (Principal Executive
                         Officer)

/s/R. Scott Asen         Director                  April 14, 1999
----------------------
R. Scott Asen

/s/Anthony R. Barringer  Director                  April 14, 1999
----------------------
Anthony R. Barringer

/s/C.F. Wasser, III      Director                  April 14, 1999
----------------------
C.F. Wasser, III

/s/J. Francis Lavelle    Director                  April 14, 1999
----------------------
J. Francis Lavelle
</TABLE>


                                   74