x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the quarterly period ended December 31, 2009
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OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the transition period from ___________ to
_____________.
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INDIANA
(State
or other jurisdiction of incorporation or
organization)
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35-1345024
(I.R.S.
Employer Identification No.)
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2701
KENT AVENUE
WEST LAFAYETTE, INDIANA
(Address
of principal executive offices)
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47906
(Zip
code)
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Page
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PART
I
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FINANCIAL
INFORMATION
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Item
1
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Condensed
Consolidated Financial Statements (Unaudited):
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|
Condensed
Consolidated Balance Sheets as of December 31, 2009 and September 30,
2009
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3
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Condensed
Consolidated Statements of Operations for the Three Months Ended December
31, 2009 and 2008
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4
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Condensed
Consolidated Statements of Cash Flows for the Three Months Ended December
31, 2009 and 2008
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5
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Notes
to Condensed Consolidated Financial Statements
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6
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Item
2
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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11
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Item
4
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Controls
and Procedures
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19
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PART
II
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OTHER
INFORMATION
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Item
1A
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Risk
Factors
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19
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Item
5
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Other Information |
19
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Item
6
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Exhibits
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20
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Signatures
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21
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December 31,
2009
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September 30,
2009
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|||||||
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(Unaudited)
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|||||||
Assets
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||||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$ | 524 | $ | 870 | ||||
Accounts
receivable
|
||||||||
Trade
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2,792 | 3,996 | ||||||
Unbilled
revenues and other
|
1,438 | 1,684 | ||||||
Inventories
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2,006 | 1,847 | ||||||
Refundable
income taxes
|
538 | 544 | ||||||
Prepaid
expenses
|
460 | 622 | ||||||
Total
current assets
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7,758 | 9,563 | ||||||
Property
and equipment, net
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20,746 | 21,282 | ||||||
Deferred
income taxes
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12 | 12 | ||||||
Goodwill
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1,383 | 1,383 | ||||||
Intangible
assets, net
|
106 | 114 | ||||||
Debt
issue costs
|
132 | 145 | ||||||
Other
assets
|
85 | 86 | ||||||
Total
assets
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$ | 30,222 | $ | 32,585 | ||||
Liabilities
and shareholders’ equity
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||||||||
Current
liabilities:
|
||||||||
Accounts
payable
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$ | 2,050 | $ | 1,997 | ||||
Accrued
expenses
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1,587 | 2,113 | ||||||
Customer
advances
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2,916 | 2,863 | ||||||
Income
tax accruals
|
473 | 473 | ||||||
Revolving
line of credit
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1,569 | 1,759 | ||||||
Current
portion of capital lease obligation
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587 | 650 | ||||||
Current
portion of long-term debt
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1,598 | 524 | ||||||
Total
current liabilities
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10,780 | 10,379 | ||||||
Capital
lease obligation, less current portion
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664 | 792 | ||||||
Long-term
debt, less current portion
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6,989 | 8,191 | ||||||
Fair
value of interest rate swaps
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86 | 103 | ||||||
Shareholders’
equity:
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||||||||
Preferred
Shares:
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||||||||
Authorized
1,000 shares; none issued and outstanding
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— | — | ||||||
Common
shares, no par value:
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||||||||
Authorized
19,000 shares; issued and outstanding 4,915 at December 31, 2009 and
September 30, 2009
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1,191 | 1,191 | ||||||
Additional
paid-in capital
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13,220 | 13,131 | ||||||
Accumulated
deficit
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(2,778 | ) | (1,290 | ) | ||||
Accumulated
other comprehensive income (loss)
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70 | 88 | ||||||
Total
shareholders’ equity
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11,703 | 13,120 | ||||||
Total
liabilities and shareholders’ equity
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$ | 30,222 | $ | 32,585 |
Three Months Ended
December 31,
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||||||||
2009
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2008
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|||||||
Service
revenue
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$ | 4,811 | $ | 5,987 | ||||
Product
revenue
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1,566 | 2,089 | ||||||
Total
revenue
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6,377 | 8,076 | ||||||
Cost
of service revenue
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4,570 | 5,288 | ||||||
Cost
of product revenue
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611 | 741 | ||||||
Total
cost of revenue
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5,181 | 6,029 | ||||||
Gross
profit
|
1,196 | 2,047 | ||||||
Operating
expenses:
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||||||||
Selling
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785 | 1,005 | ||||||
Research
and development
|
171 | 205 | ||||||
General
and administrative
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1,487 | 2,390 | ||||||
Loss
on sale of property and equipment
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— | 20 | ||||||
Total
operating expenses
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2,443 | 3,621 | ||||||
Operating
loss
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(1,247 | ) | (1,574 | ) | ||||
Interest
income
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— | 2 | ||||||
Interest
expense
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(241 | ) | (392 | ) | ||||
Other
income
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— | 1 | ||||||
Loss
before income taxes
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(1,488 | ) | (1,963 | ) | ||||
Income
tax benefit
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— | (379 | ) | |||||
Net
loss
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$ | (1,488 | ) | $ | (1,584 | ) | ||
Basic
net loss per share
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$ | (0.30 | ) | $ | (0.32 | ) | ||
Diluted
net loss per share
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$ | (0.30 | ) | $ | (0.32 | ) | ||
Weighted
common shares outstanding:
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||||||||
Basic
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4,915 | 4,915 | ||||||
Diluted
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4,915 | 4,915 |
Three
Months Ended December 31,
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||||||||
2009
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2008
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|||||||
Operating
activities:
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||||||||
Net
loss
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$ | (1,488 | ) | $ | (1,584 | ) | ||
Adjustments
to reconcile net loss from continuing operations to net cash provided by
operating activities:
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||||||||
Depreciation
and amortization
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607 | 680 | ||||||
Employee
stock compensation expense
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89 | 158 | ||||||
Bad
debt expense
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12 | 1 | ||||||
Interest
rate swap
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(17 | ) | 137 | |||||
Loss
on sale of property and equipment
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— | 20 | ||||||
Deferred
income taxes
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— | (377 | ) | |||||
Changes
in operating assets and liabilities:
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||||||||
Accounts
receivable
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1,437 | 2,920 | ||||||
Inventories
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(160 | ) | (12 | ) | ||||
Refundable
income taxes
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6 | — | ||||||
Prepaid
expenses and other assets
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176 | 99 | ||||||
Accounts
payable
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53 | (997 | ) | |||||
Accrued
expenses
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(526 | ) | (128 | ) | ||||
Customer
advances
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53 | (652 | ) | |||||
Net
cash provided by continuing operating activities
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242 | 265 | ||||||
Investing
activities:
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||||||||
Capital
expenditures
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(57 | ) | (304 | ) | ||||
Net
cash used by continuing investing activities
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(57 | ) | (304 | ) | ||||
Financing
activities:
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||||||||
Payments
of long-term debt
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(128 | ) | (120 | ) | ||||
Payments
on revolving line of credit
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(7,334 | ) | (4,668 | ) | ||||
Borrowings
on revolving line of credit
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7,144 | 4,292 | ||||||
Payments
on capital lease obligations
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(191 | ) | (174 | ) | ||||
Net
cash used by continuing financing activities
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(509 | ) | (670 | ) | ||||
Cash
Flow of Discontinued Operations (Note 5):
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||||||||
Cash
provided (used) by operating activities
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— | 558 | ||||||
Net
cash provided by discontinued operations
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— | 558 | ||||||
Effect
of exchange rate changes
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(22 | ) | 267 | |||||
Net
increase (decrease) in cash and cash equivalents
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(346 | ) | 116 | |||||
Cash
and cash equivalents at beginning of period
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870 | 335 | ||||||
Cash
and cash equivalents at end of period
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$ | 524 | $ | 451 |
1.
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DESCRIPTION
OF THE BUSINESS AND BASIS OF
PRESENTATION
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2.
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STOCK-BASED
COMPENSATION
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Options
(shares)
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Weighted-
Average
Exercise Price
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Weighted-
Average
Grant Date
Fair Value
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||||||||||
Outstanding
- October 1, 2009
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620 | $ | 5.97 | $ | 3.36 | |||||||
Exercised
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- | $ | - | $ | - | |||||||
Granted
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- | $ | - | $ | - | |||||||
Terminated
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- | $ | - | $ | - | |||||||
Outstanding
- December 31, 2009
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620 | $ | 5.97 | $ | 3.36 |
3.
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LOSS PER
SHARE
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Three Months Ended
December 31,
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||||||||
2009
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2008
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|||||||
Basic
net loss per share:
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||||||||
Net
loss applicable to common shareholders
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$ | (1,488 | ) | $ | (1,584 | ) | ||
Weighted
average common shares outstanding
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4,915 | 4,915 | ||||||
Basic
net loss per share
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$ | (0.30 | ) | $ | (0.32 | ) | ||
Diluted
net loss per share:
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||||||||
Diluted
net loss applicable to common shareholders
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$ | (1,488 | ) | $ | (1,584 | ) | ||
Weighted
average common shares outstanding
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4,915 | 4,915 | ||||||
Dilutive
stock options/shares
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— | — | ||||||
Diluted
weighted average common shares outstanding
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4,915 | 4,915 | ||||||
Diluted
net loss per share
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$ | (0.30 | ) | $ | (0.32 | ) |
4.
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INVENTORIES
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December 31,
2009
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September 30,
2009
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|||||||
Raw
materials
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$ | 1,676 | $ | 1,732 | ||||
Work
in progress
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323 | 131 | ||||||
Finished
goods
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294 | 271 | ||||||
$ | 2,293 | $ | 2,134 | |||||
Obsolescence
reserve
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(287 | ) | (287 | ) | ||||
$ | 2,006 | $ | 1,847 |
5.
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DISCONTINUED
OPERATIONS
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6.
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SEGMENT
INFORMATION
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Three
Months Ended
December
31,
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||||||||
2009
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2008
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|||||||
Revenue:
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||||||||
Service
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$ | 4,811 | $ | 5,987 | ||||
Product
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1,566 | 2,089 | ||||||
$ | 6,377 | $ | 8,076 | |||||
Operating
loss:
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||||||||
Service
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$ | (1,193 | ) | $ | (1,311 | ) | ||
Product
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(54 | ) | (263 | ) | ||||
$ | (1,247 | ) | $ | (1,574 | ) |
7.
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INCOME
TAXES
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8.
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DEBT
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9.
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FAIR
VALUE OF FINANCIAL INSTRUMENTS
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10.
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NEW
ACCOUNTING PRONOUNCEMENTS
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11.
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SUBSEQUENT
EVENTS
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•
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Risk-free interest
rate. The risk-free interest rate is based on U.S. Treasury
yields in effect at the time of grant for the expected term of the
option.
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•
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Expected volatility. We
use our historical stock price volatility on our common stock for our
expected volatility assumption.
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•
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Expected term. The
expected term represents the weighted-average period the stock options are
expected to remain outstanding. The expected term is determined based on
historical exercise behavior, post-vesting termination patterns, options
outstanding and future expected exercise
behavior.
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•
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Expected dividends. We
assumed that we will pay no
dividends.
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Three Months Ended
December 31,
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||||||||
2009
|
2008
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|||||||
Service
revenue
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75.4 | % | 74.1 | % | ||||
Product
revenue
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24.6 | 25.9 | ||||||
Total
revenue
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100.0 | 100.0 | ||||||
Cost
of service revenue (a)
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95.0 | 88.3 | ||||||
Cost
of product revenue (a)
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39.0 | 35.5 | ||||||
Total
cost of revenue
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81.2 | 74.7 | ||||||
Gross
profit
|
18.8 | 25.3 | ||||||
Total
operating expenses
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38.3 | 44.8 | ||||||
Operating
loss
|
(19.6 | ) | (19.5 | ) | ||||
Other
expense
|
(3.8 | ) | (4.8 | ) | ||||
Loss
before income taxes
|
(23.3 | ) | (24.3 | ) | ||||
Income
tax benefit
|
— | (4.7 | ) | |||||
Net
loss
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(23.3 | )% | (19.6 | )% |
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(a)
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Percentage
of service and product revenues,
respectively
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Number
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Description of Exhibits
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(3)
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3.1
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Second
Amended and Restated Articles of Incorporation of Bioanalytical Systems,
Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q for the
quarter ended December 31, 1997).
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3.2
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Second
Amended and Restated Bylaws of Bioanalytical Systems, Inc., as
subsequently amended (incorporated by reference to Exhibit 3.2 of Form
10-K for the fiscal year ended September 30, 2009).
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(4)
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4.1
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Specimen
Certificate for Common Shares (incorporated by reference to Exhibit 4.1 to
Registration Statement on Form S-1, Registration No.
333-36429).
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10.1
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Fifth
Amendment to Amended and Restated Credit Agreement between Bioanalytical
Systems,
Inc.
and PNC Bank, as successor by merger to National City Bank, executed
December 31, 2009 (incorporated by reference to Exhibit 10.1 to Form 8-K
filed January 7, 2010).
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10.2
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Waiver
letter, dated January 7, 2010, from Regions Bank (incorporated by
reference to Exhibit 10.33 of Form 10-K for the fiscal year ended
September 30, 2009).
|
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10.3
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Third
amendment to Loan Agreement between Bioanalytical Systems, Inc. and
Regions Bank, dated January 13, 2010 (incorporated by reference to Exhibit
10.34 of Form 10-K for the fiscal year ended September 30,
2009).
|
||
10.4
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Loan
and Security Agreement by and between Bioanalytical Systems, Inc., and
Entrepreneur Growth Capital LLC, executed January 13, 2010 (incorporated
by reference to Exhibit 10.35 of Form 10-K for the fiscal year ended
September 30, 2009).
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10.5
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Agreement
for Lease, by Bioanalytical Systems, Inc. and Forum Financial Services,
dated January 22, 2010 (filed herewith).
|
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10.6
|
Amendment
to Employment Agreement between Anthony S. Chilton and Bioanalytical
Systems, Inc., dated February 1, 2010 (filed herewith).
|
||
10.7
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Employee
Incentive Stock Option Agreement between Anthony S. Chilton and
Bioanalytical Systems, Inc., dated February 1, 2010 (filed
herewith).
|
||
(31)
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31.1
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Certification
of Richard M. Shepperd (filed herewith).
|
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31.2
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Certification
of Michael R. Cox (filed herewith).
|
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(32)
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32.1
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Written
Statement of Chief Executive Officer and Chief Financial Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350) (filed herewith)..
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BIOANALYTICAL
SYSTEMS, INC.
|
|
(Registrant)
|
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Date: February
16, 2010
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By: /s/ Richard
M. Shepperd
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Richard
M. Shepperd
|
|
Chief
Executive Officer
|
|
Date: February
16, 2010
|
By:
/s/ Michael R. Cox
|
Michael
R. Cox
|
|
Vice
President, Finance and Administration, Chief
Financial
Officer and Treasurer
|