x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the quarterly period ended June 30, 2010
|
OR
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the transition period from ___________ to
_____________.
|
INDIANA
(State
or other jurisdiction of incorporation or organization)
|
35-1345024
(I.R.S.
Employer Identification No.)
|
|
2701
KENT AVENUE
WEST LAFAYETTE, INDIANA
(Address
of principal executive offices)
|
47906
(Zip
code)
|
|
(765) 463-4527
(Registrant's
telephone number, including area
code)
|
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1
|
Condensed
Consolidated Financial Statements (Unaudited):
|
|
Condensed
Consolidated Balance Sheets as of June 30, 2010 and September 30,
2009
|
3
|
|
Condensed
Consolidated Statements of Operations for the Three and Nine Months Ended
June 30, 2010 and 2009
|
4
|
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended June 30,
2010 and 2009
|
5
|
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
11
|
Item
4
|
Controls
and Procedures
|
20
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1A
|
Risk
Factors
|
20
|
Item
5
|
Other
Information
|
21
|
Item
6
|
Exhibits
|
22
|
Signatures
|
23
|
June 30,
2010
|
September 30,
2009
|
|||||||
|
(Unaudited)
|
|||||||
Assets | ||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 1,499 | $ | 870 | ||||
Accounts
receivable
|
||||||||
Trade
|
3,743 | 3,996 | ||||||
Unbilled
revenues and other
|
1,033 | 1,684 | ||||||
Inventories
|
1,714 | 1,847 | ||||||
Refundable
income taxes
|
105 | 544 | ||||||
Prepaid
expenses
|
467 | 622 | ||||||
Total
current assets
|
8,561 | 9,563 | ||||||
Property
and equipment, net
|
19,715 | 21,282 | ||||||
Deferred
income taxes
|
12 | 12 | ||||||
Goodwill
|
1,383 | 1,383 | ||||||
Intangible
assets, net
|
91 | 114 | ||||||
Debt
issue costs
|
174 | 145 | ||||||
Other
assets
|
81 | 86 | ||||||
Total
assets
|
$ | 30,017 | $ | 32,585 | ||||
Liabilities
and shareholders’ equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 1,818 | $ | 1,997 | ||||
Accrued
expenses
|
1,864 | 2,113 | ||||||
Customer
advances
|
4,197 | 2,863 | ||||||
Income
tax accruals
|
29 | 473 | ||||||
Revolving
line of credit
|
1,341 | 1,759 | ||||||
Current
portion of capital lease obligation
|
591 | 650 | ||||||
Current
portion of long-term debt
|
3,059 | 524 | ||||||
Total
current liabilities
|
12,899 | 10,379 | ||||||
Capital
lease obligation, less current portion
|
728 | 792 | ||||||
Long-term
debt, less current portion
|
5,474 | 8,191 | ||||||
Fair
value of interest rate swaps
|
49 | 103 | ||||||
Shareholders’
equity:
|
||||||||
Preferred
Shares:
|
||||||||
Authorized
1,000 shares; none issued and outstanding
|
— | — | ||||||
Common
shares, no par value:
|
||||||||
Authorized
19,000 shares; issued and outstanding 4,915 at
|
||||||||
June
30, 2010 and September 30, 2009
|
1,191 | 1,191 | ||||||
Additional
paid-in capital
|
13,305 | 13,131 | ||||||
Accumulated
deficit
|
(3,701 | ) | (1,290 | ) | ||||
Accumulated
other comprehensive income
|
72 | 88 | ||||||
Total
shareholders’ equity
|
10,867 | 13,120 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 30,017 | $ | 32,585 |
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Service
revenue
|
$ | 6,034 | $ | 6,113 | $ | 16,092 | $ | 17,423 | ||||||||
Product
revenue
|
2,030 | 2,008 | 5,284 | 5,841 | ||||||||||||
Total
revenue
|
8,064 | 8,121 | 21,376 | 23,264 | ||||||||||||
Cost
of service revenue
|
4,538 | 5,212 | 13,863 | 15,777 | ||||||||||||
Cost
of product revenue
|
855 | 774 | 2,161 | 2,433 | ||||||||||||
Total
cost of revenue
|
5,393 | 5,986 | 16,024 | 18,210 | ||||||||||||
Gross
profit
|
2,671 | 2,135 | 5,352 | 5,054 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling
|
589 | 734 | 2,057 | 2,569 | ||||||||||||
Research
and development
|
124 | 174 | 434 | 592 | ||||||||||||
General
and administrative
|
1,400 | 1,325 | 4,830 | 5,765 | ||||||||||||
Impairment
loss
|
— | 472 | — | 472 | ||||||||||||
Total
operating expenses
|
2,113 | 2,705 | 7,321 | 9,398 | ||||||||||||
Operating
income (loss)
|
558 | (571 | ) | (1,969 | ) | (4,344 | ) | |||||||||
Interest
expense
|
(270 | ) | (228 | ) | (786 | ) | (870 | ) | ||||||||
Other
income
|
— | — | — | 3 | ||||||||||||
Income
(loss) before income taxes
|
288 | (799 | ) | (2,755 | ) | (5,211 | ) | |||||||||
Income
tax benefit
|
— | (167 | ) | (344 | ) | (1,164 | ) | |||||||||
Net
income (loss)
|
$ | 288 | $ | (632 | ) | $ | (2,411 | ) | $ | (4,047 | ) | |||||
Basic
net income (loss) per share
|
$ | 0.06 | $ | (0.13 | ) | $ | (0.49 | ) | $ | (0.82 | ) | |||||
Diluted
net income (loss) per share
|
$ | 0.06 | $ | (0.13 | ) | $ | (0.49 | ) | $ | (0.82 | ) | |||||
Weighted
common shares outstanding:
|
||||||||||||||||
Basic
|
4,915 | 4,915 | 4,915 | 4,915 | ||||||||||||
Diluted
|
4,915 | 4,915 | 4,915 | 4,915 |
Nine Months Ended June 30,
|
||||||||
2010
|
2009
|
|||||||
Operating
activities:
|
||||||||
Net
loss
|
$ | (2,411 | ) | $ | (4,047 | ) | ||
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
1,777 | 2,008 | ||||||
Asset
impairment loss
|
— | 472 | ||||||
Employee
stock compensation expense
|
174 | 456 | ||||||
Bad
debt expense
|
50 | 26 | ||||||
Liability
incurred on settlement of lease
|
216 | — | ||||||
(Gain)
loss on interest rate swap
|
(54 | ) | 110 | |||||
Loss
on sale of property and equipment
|
— | 21 | ||||||
Deferred
income taxes
|
— | (1,164 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
853 | 3,176 | ||||||
Inventories
|
133 | 271 | ||||||
Income
taxes payable and refundable
|
(4 | ) | 605 | |||||
Prepaid
expenses and other assets
|
128 | 159 | ||||||
Accounts
payable
|
(179 | ) | (444 | ) | ||||
Accrued
expenses
|
(249 | ) | (4 | ) | ||||
Customer
advances
|
1,333 | (429 | ) | |||||
Net
cash provided by operating activities
|
1,767 | 1,216 | ||||||
Investing
activities:
|
||||||||
Capital
expenditures, net of proceeds from sale of property and
equipment
|
216 | (690 | ) | |||||
Net
cash provided (used) by investing activities
|
216 | (690 | ) | |||||
Financing
activities:
|
||||||||
Payments
of long-term debt
|
(398 | ) | (366 | ) | ||||
Payments
on revolving line of credit
|
(21,818 | ) | (13,511 | ) | ||||
Borrowings
on revolving line of credit
|
21,399 | 12,979 | ||||||
Payments
on capital lease obligations
|
(554 | ) | (534 | ) | ||||
Net
cash used by financing activities
|
(1,371 | ) | (1,432 | ) | ||||
Cash
Flow of Discontinued Operations:
|
||||||||
Cash
provided by operating activities
|
— | 588 | ||||||
Net
cash provided by discontinued operations
|
— | 588 | ||||||
Effect
of exchange rate changes
|
17 | 205 | ||||||
Net
increase (decrease) in cash and cash equivalents
|
629 | (113 | ) | |||||
Cash
and cash equivalents at beginning of period
|
870 | 335 | ||||||
Cash
and cash equivalents at end of period
|
$ | 1,499 | $ | 222 |
1.
|
DESCRIPTION
OF THE BUSINESS AND BASIS OF
PRESENTATION
|
2.
|
STOCK-BASED
COMPENSATION
|
|
2010
|
|||
Risk-free
interest rate
|
3.194% - 3.474 | % | ||
Dividend
yield
|
0.00 | % | ||
Volatility
of the expected market price of the Company’s common stock
|
93.00% - 96.00 | % | ||
Expected
life of the options (years)
|
8.0 |
Options
(shares)
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Grant
Date
Fair
Value
|
||||||||||
Outstanding
- October 1, 2009
|
620
|
$
|
5.97
|
$
|
3.36
|
|||||||
Exercised
|
-
|
$
|
-
|
$
|
-
|
|||||||
Granted
|
240
|
$
|
1.14
|
$
|
0.96
|
|||||||
Terminated
|
(347
|
)
|
$
|
3.92
|
$
|
2.22
|
||||||
Outstanding
- June 30, 2010
|
513
|
$
|
3.28
|
$
|
2.19
|
3.
|
INCOME (LOSS) PER
SHARE
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Basic
net income (loss) per share:
|
||||||||||||||||
Net
income (loss) applicable to common shareholders
|
$ | 288 | $ | (632 | ) | $ | (2,411 | ) | $ | (4,047 | ) | |||||
Weighted
average common shares outstanding
|
4,915 | 4,915 | 4,915 | 4,915 | ||||||||||||
Basic
net income (loss) per share
|
$ | 0.06 | $ | (0.13 | ) | $ | (0.49 | ) | $ | (0.82 | ) | |||||
Diluted
net income (loss) per share:
|
||||||||||||||||
Diluted
net income (loss) applicable to common shareholders
|
$ | 288 | $ | (632 | ) | $ | (2,411 | ) | $ | (4,047 | ) | |||||
Weighted
average common shares outstanding
|
4,915 | 4,915 | 4,915 | 4,915 | ||||||||||||
Dilutive
stock options/shares
|
— | — | — | — | ||||||||||||
Diluted
weighted average common shares outstanding
|
4,915 | 4,915 | 4,915 | 4,915 | ||||||||||||
Diluted
net income (loss) per share
|
$ | 0.06 | $ | (0.13 | ) | $ | (0.49 | ) | $ |
(0.82
|
) |
4.
|
INVENTORIES
|
June 30,
2010
|
September 30,
2009
|
|||||||
Raw
materials
|
$ | 1,544 | $ | 1,732 | ||||
Work
in progress
|
248 | 131 | ||||||
Finished
goods
|
252 | 271 | ||||||
$ | 2,044 | $ | 2,134 | |||||
Obsolescence
reserve
|
(330 | ) | (287 | ) | ||||
$ | 1,714 | $ | 1,847 |
5.
|
SEGMENT
INFORMATION
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenue:
|
||||||||||||||||
Service
|
$ | 6,034 | $ | 6,113 | $ | 16,092 | $ | 17,423 | ||||||||
Product
|
2,030 | 2,008 | 5,284 | 5,841 | ||||||||||||
$ | 8,064 | $ | 8,121 | $ | 21,376 | $ | 23,264 | |||||||||
Operating
income (loss):
|
||||||||||||||||
Service
|
$ | 227 | $ | (683 | ) | $ | (2,320 | ) | $ | (3,738 | ) | |||||
Product
|
331 | 112 | 351 | (606 | ) | |||||||||||
$ | 558 | $ | (571 | ) | $ | (1,969 | ) | $ | (4,344 | ) |
6.
|
INCOME
TAXES
|
7.
|
DEBT
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Service
revenue
|
74.8 | % | 75.3 | % | 75.3 | % | 74.9 | % | ||||||||
Product
revenue
|
25.2 | 24.7 | 24.7 | 25.1 | ||||||||||||
Total
revenue
|
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Cost
of service revenue (a)
|
75.2 | 85.3 | 86.1 | 90.6 | ||||||||||||
Cost
of product revenue (a)
|
42.1 | 38.5 | 40.9 | 41.7 | ||||||||||||
Total
cost of revenue
|
66.9 | 73.7 | 75.0 | 78.3 | ||||||||||||
Gross
profit
|
33.1 | 26.3 | 25.0 | 21.7 | ||||||||||||
Total
operating expenses
|
26.2 | 33.3 | 34.2 | 40.4 | ||||||||||||
Operating
income (loss)
|
6.9 | (7.0 | ) | (9.2 | ) | (18.7 | ) | |||||||||
Other
expense
|
3.3 | 2.8 | 3.7 | 3.7 | ||||||||||||
Income
(loss) before income taxes
|
3.6 | (9.8 | ) | (12.9 | ) | (22.4 | ) | |||||||||
Income
tax benefit
|
— | (2.1 | ) | (1.6 | ) | (5.0 | ) | |||||||||
Net
income (loss)
|
3.6 | % | (7.7 | ) % | (11.3 | ) % | (17.4 | ) % |
|
(a)
|
Percentage
of service and product revenues,
respectively
|
Three Months Ended
|
||||||||||||||||
June 30,
|
||||||||||||||||
2010
|
2009
|
Change
|
%
|
|||||||||||||
Bioanalytical
analysis
|
$ | 3,635 | $ | 3,361 | $ | 274 | 8.2 | % | ||||||||
Toxicology
|
2,168 | 2,024 | 144 | 7.1 | % | |||||||||||
Other
laboratory services
|
231 | 728 | (497 | ) | -68.3 | % |
Three Months Ended
|
||||||||||||||||
June 30,
|
||||||||||||||||
2010
|
2009
|
Change
|
%
|
|||||||||||||
Culex®, in-vivo
sampling systems
|
$ | 1,129 | $ | 985 | $ | 144 | 14.6 | % | ||||||||
Analytical
instruments
|
826 | 745 | 81 | 10.9 | % |
Nine Months Ended
|
||||||||||||||||
June 30,
|
||||||||||||||||
2010
|
2009
|
Change
|
%
|
|||||||||||||
Bioanalytical
analysis
|
$ | 9,626 | $ | 10,077 | $ | (451 | ) | -4.5 | % | |||||||
Toxicology
|
5,291 | 5,494 | (203 | ) | -3.7 | % | ||||||||||
Other
laboratory services
|
1,175 | 1,852 | (677 | ) | -36.6 | % |
Nine Months Ended
|
||||||||||||||||
June 30,
|
||||||||||||||||
2010
|
2009
|
Change
|
%
|
|||||||||||||
Culex,
in-vivo sampling systems
|
$ | 2,482 | $ | 2,387 | $ | 95 | 4.0 | % | ||||||||
Analytical
instruments
|
2,211 | 2,387 | (176 | ) | -7.4 | % |
Number
|
Description of Exhibits
|
||
(3)
|
3.1
|
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).
|
|
3.2
|
Second
Amended and Restated Bylaws of Bioanalytical Systems, Inc., as
subsequently amended (incorporated by reference to Exhibit 3.2 to Form
10-K for the fiscal year ended September 30, 2009).
|
||
(4)
|
4.1
|
Specimen
Certificate for Common Shares (incorporated by reference to Exhibit 4.1 to
Registration Statement on Form S-1, Registration No.
333-36429).
|
|
(10)
|
10.1
|
Amendment
to Employment Agreement between Michael R. Cox and Bioanalytical Systems
Inc., dated April 15, 2010 (filed herewith).
|
|
10.2
|
Employee
Incentive Stock Option Agreement between Michael R. Cox and Bioanalytical
Systems Inc. dated April 15, 2010 (filed herewith).
|
||
10.3
|
Promissory
Note between Bioanalytical Systems, Inc. and Algorithme Holding Inc. dated
April 30, 2010 (incorporated by reference to Exhibit 10.1 to Form 8-K
filed April 30, 2010).
|
||
10.4
|
Waiver
letter, dated May 11, 2010 from Regions Bank (incorporated by reference to
Exhibit 10.8 to Form 10-Q for the quarter ended March 31,
2010).
|
||
10.5
|
Employee
Incentive Stock Option Agreement between Anthony S. Chilton and
Bioanalytical Systems, Inc., dated May 12, 2010 (filed
herewith).
|
||
10.6
|
Amendment
to Loan Agreement between Bioanalytical Systems, Inc., and Entrepreneur
Growth Capital LLC, dated May 13, 2010 (incorporated by reference to
Exhibit 10.9 to Form 10-Q for the quarter ended March 31,
2010).
|
||
10.7
|
Waiver
letter, dated August 9, 2010 from Regions Bank (filed
herewith).
|
||
(31)
|
31.1
|
Certification
of Anthony S. Chilton (filed herewith).
|
|
31.2
|
Certification
of Michael R. Cox (filed herewith).
|
||
(32)
|
32.1
|
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)..
|
BIOANALYTICAL
SYSTEMS, INC.
|
|
(Registrant)
|
|
Date:
August 13, 2010
|
By:
/s/ Anthony S. Chilton
|
Anthony
S. Chilton
|
|
President
and Chief Executive Officer
|
|
Date:
August 13, 2010
|
By:
/s/ Michael R. Cox
|
Michael
R. Cox
|
|
Vice
President, Finance and Administration, Chief
Financial
Officer and
Treasurer
|