BIOANALYTICAL
SYSTEMS, INC.
(Exact
name of the registrant as specified in its
charter)
|
INDIANA
|
35-1345024
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
2701
KENT AVENUE
|
|
WEST
LAFAYETTE, IN
|
47906
|
(Address
of principal executive offices)
|
(Zip
code)
|
(765)
463-4527
(Registrant’s
telephone number, including area
code)
|
|
|
PAGE
NUMBER
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|||
Item
1
|
Condensed
Consolidated Financial Statements (Unaudited):
|
|||
|
|
|||
|
Condensed
Consolidated Balance Sheets as of March 31, 2007 and September 30,
2006
|
3
|
||
|
|
|||
|
Condensed
Consolidated Statements of Operations for the Three Months and Six
Months
Ended March 31, 2007 and 2006
|
4
|
||
|
|
|||
|
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended March
31,
2007 and 2006
|
5
|
||
|
|
|||
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
||
|
|
|||
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
|
10
|
||
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
14
|
||
Item
4
|
Controls
and Procedures
|
14
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
15
|
||
Item
6
|
Exhibits
|
15
|
||
|
|
|||
SIGNATURES
|
|
16
|
(Unaudited)
March 31, 2007
|
(Audited)
September 30, 2006
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
1,415
|
$
|
1,647
|
|||
Accounts
receivable
|
|||||||
Trade
|
5,767
|
6,492
|
|||||
Unbilled
revenues and other
|
2,703
|
1,545
|
|||||
Inventories
|
1,973
|
1,887
|
|||||
Deferred
income taxes
|
724
|
604
|
|||||
Refundable
income taxes
|
940
|
888
|
|||||
Prepaid
expenses
|
717
|
599
|
|||||
Asset
held for resale
|
653
|
—
|
|||||
Total
current assets
|
14,892
|
13,662
|
|||||
Property
and equipment, net
|
23,925
|
25,766
|
|||||
Goodwill
|
1,855
|
1,855
|
|||||
Intangible
assets, net
|
411
|
517
|
|||||
Debt
issue costs
|
250
|
246
|
|||||
Other
assets
|
246
|
268
|
|||||
Total
assets
|
$
|
41,579
|
$
|
42,314
|
|||
Liabilities
and shareholders’ equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,537
|
$
|
1,610
|
|||
Accrued
expenses
|
2,602
|
3,081
|
|||||
Customer
advances
|
3,916
|
4,226
|
|||||
Current
portion of capital lease obligation
|
490
|
472
|
|||||
Current
portion of long-term debt
|
4,849
|
721
|
|||||
Total
current liabilities
|
13,394
|
10,110
|
|||||
Capital
lease obligation, less current portion
|
1,399
|
1,648
|
|||||
Long-term
debt, less current portion
|
7,996
|
8,186
|
|||||
Subordinated
debt, long-term
|
—
|
4,477
|
|||||
Deferred
income taxes
|
539
|
539
|
|||||
Shareholders
equity:
|
|||||||
Preferred
Shares:
|
|||||||
Authorized
shares - 1,000
|
|||||||
Issued
and outstanding shares - none
|
—
|
—
|
|||||
Common
Shares:
|
|||||||
Authorized
shares - 19,000
|
|||||||
Issued
and outstanding shares - 4,909 at March 31, 2007
|
|||||||
and
4,892 at September 30, 2006
|
1,189
|
1,182
|
|||||
Additional
paid-in capital
|
11,842
|
11,677
|
|||||
Retained
earnings
|
5,264
|
4,584
|
|||||
Accumulated
other comprehensive loss
|
(44
|
)
|
(89
|
)
|
|||
|
|||||||
Total
shareholders’ equity
|
18,251
|
17,354
|
|||||
|
|||||||
Total
liabilities and shareholders’ equity
|
$
|
41,579
|
$
|
42,314
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Service
revenue
|
$
|
8,726
|
$
|
10,053
|
$
|
17,334
|
$
|
17,592
|
|||||
Product
revenue
|
2,585
|
2,364
|
4,861
|
4,669
|
|||||||||
Total
revenue
|
11,311
|
12,417
|
22,195
|
22,261
|
|||||||||
Cost
of service revenue
|
6,968
|
6,760
|
13,585
|
12,624
|
|||||||||
Cost
of product revenue
|
1,163
|
725
|
2,040
|
1,560
|
|||||||||
Total
cost of revenue
|
8,131
|
7,485
|
15,625
|
14,184
|
|||||||||
Gross
profit
|
3,180
|
4,932
|
6,570
|
8,077
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling
|
673
|
680
|
1,352
|
1,413
|
|||||||||
Research
and development
|
101
|
201
|
456
|
639
|
|||||||||
General
and administrative
|
1,858
|
2,873
|
3,497
|
5,774
|
|||||||||
(Gain)
loss on sale of property and equipment
|
95
|
11
|
83
|
(5
|
)
|
||||||||
Total
operating expenses
|
2,727
|
3,765
|
5,388
|
7,821
|
|||||||||
Operating
income
|
453
|
1,167
|
1,182
|
256
|
|||||||||
Interest
income
|
12
|
2
|
24
|
4
|
|||||||||
Interest
expense
|
(230
|
)
|
(248
|
)
|
(471
|
)
|
(508
|
)
|
|||||
Other
income
|
—
|
—
|
3
|
—
|
|||||||||
Income
(loss) before income taxes
|
235
|
921
|
738
|
(248
|
)
|
||||||||
Income
taxes (benefit)
|
111
|
383
|
58
|
(70
|
)
|
||||||||
Net
income (loss)
|
$
|
124
|
$
|
538
|
$
|
680
|
$
|
(178
|
)
|
||||
Net
income (loss) per share:
|
|||||||||||||
Basic
|
$
|
0.03
|
$
|
0.11
|
$
|
0.14
|
$
|
(0.04
|
)
|
||||
Diluted
|
$
|
0.03
|
$
|
0.11
|
$
|
0.14
|
$
|
(0.04
|
)
|
||||
Weighted
common and common equivalent
|
|||||||||||||
shares
outstanding:
|
|||||||||||||
Basic
|
4,909
|
4,875
|
4,907
|
4,873
|
|||||||||
Diluted
|
4,940
|
4,971
|
4,924
|
4,873
|
Six
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Operating
activities
|
|||||||
Net
income (loss)
|
$
|
680
|
$
|
(178
|
)
|
||
Adjustments
to reconcile net income (loss) to net
|
|||||||
cash
provided by operating activities:
|
|||||||
Depreciation
and amortization
|
1,767
|
1,702
|
|||||
(Gain)
Loss on sale of property and equipment
|
83
|
(5
|
)
|
||||
Deferred
income taxes
|
(120
|
)
|
(100
|
)
|
|||
Employee
stock option expense
|
93
|
139
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(433
|
)
|
2,619
|
||||
Inventories
|
(86
|
)
|
(166
|
)
|
|||
Prepaid
expenses
|
(98
|
)
|
(175
|
)
|
|||
Asset
held for resale
|
(653
|
)
|
—
|
||||
Accounts
payable
|
(73
|
)
|
(442
|
)
|
|||
Refundable
income taxes
|
(51
|
)
|
(307
|
)
|
|||
Accrued
expenses
|
(442
|
)
|
(514
|
)
|
|||
Customer
advances
|
(310
|
)
|
(1,496
|
)
|
|||
Net
cash provided by operating activities
|
357
|
1,077
|
|||||
Investing
activities
|
|||||||
Capital
expenditures - Net of disposals
|
290
|
(1,332
|
)
|
||||
Proceeds
from sale of property and equipment
|
—
|
50
|
|||||
Net
cash provided (used) by investing activities
|
290
|
(1,282
|
)
|
||||
Financing
activities
|
|||||||
Borrowings
on line of credit
|
0
|
8,805
|
|||||
Payments
on line of credit
|
0
|
(8,156
|
)
|
||||
Payments
on capital lease obligations
|
(231
|
)
|
(168
|
)
|
|||
Proceeds
from exercise of stock options
|
79
|
94
|
|||||
Payments
of long-term debt
|
(539
|
)
|
(551
|
)
|
|||
Net
cash provided (used) by financing activities
|
(691
|
)
|
24
|
||||
Effects
of exchange rate changes
|
(188
|
)
|
(35
|
)
|
|||
Net
increase (decrease) in cash and cash equivalents
|
(232
|
)
|
(216
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
1,647
|
1,254
|
|||||
Cash
and cash equivalents at end of period
|
$
|
1,415
|
$
|
1,038
|
Risk-free
interest rate
|
4.65
|
%
|
||
Dividend
yield
|
0.00
|
%
|
||
Volatility
factor of the expected market price of the Company’s common
stock
|
0.623
|
|||
Expected
life of the options (years)
|
6.9
—7.7
|
Three
Months Ended March 31,
|
Six
Months Ended March 31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Shares:
|
|||||||||||||
Basic
shares
|
4,909
|
4,875
|
4,907
|
4,873
|
|||||||||
Effect of dilutive securities | |||||||||||||
Options
|
31
|
96
|
17
|
—
|
|||||||||
Convertible
Subordinated debt
|
—
|
—
|
—
|
—
|
|||||||||
Diluted
shares
|
4,940
|
4,971
|
4,924
|
4,873
|
|||||||||
Basic
and diluted net income (loss)
|
$
|
124
|
$
|
538
|
$
|
680
|
$
|
(178
|
)
|
||||
Basic
earnings (loss) per share
|
$
|
0.03
|
$
|
0.11
|
$
|
0.14
|
$
|
(0.04
|
)
|
||||
Diluted
earnings (loss) per share
|
$
|
0.03
|
$
|
0.11
|
$
|
0.14
|
$
|
(0.04
|
)
|
March
31,
2007
|
September
30, 2006
|
||||||
Raw
materials
|
$
|
1,381
|
$
|
1,335
|
|||
Work
in progress
|
212
|
278
|
|||||
Finished
goods
|
463
|
357
|
|||||
2,056
|
1,970
|
||||||
Less
LIFO reserve
|
(83
|
)
|
(83
|
)
|
|||
$
|
1,973
|
$
|
1,887
|
Three
Months Ended
March 31, |
Six
Months Ended
March
31,
|
||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Operating
income (loss):
|
|||||||||||||
Services
|
$
|
278
|
$
|
393
|
$
|
736
|
$
|
(459
|
)
|
||||
Products
|
175
|
774
|
446
|
715
|
|||||||||
Total
operating income
|
453
|
1,167
|
1,182
|
256
|
|||||||||
Corporate
expenses
|
(218
|
)
|
(246
|
)
|
(444
|
)
|
(504
|
)
|
|||||
Income
(loss) before income taxes
|
$
|
235
|
$
|
921
|
$
|
738
|
$
|
(248
|
)
|
Six
Months Ended March 31, 2007
|
||||||||
Options
|
Weighted
average exercise price |
|||||||
Outstanding
- beginning of period
|
404
|
$
|
4.98
|
|||||
Exercised
|
(17
|
)
|
|
4.48
|
||||
Granted
|
20
|
5.19
|
||||||
Terminated
|
(40
|
)
|
|
4.89
|
||||
Outstanding
- end of period
|
367
|
$
|
5.03
|
|||||
Weighted
grant date fair values
|
$
|
3.37
|
Number
|
Weighted
Average
Grant
Date
Fair
Value
|
|||||||
Non-vested
options, beginning of period
|
278
|
$
|
3.43
|
|||||
Granted
|
20
|
3.49
|
||||||
Vested
|
(49
|
)
|
|
3.42
|
||||
Forfeited
|
(73
|
)
|
|
3.51
|
||||
Non-vested
options, end of period
|
176
|
$ |
3.49
|
At
March 31, 2007, there were 191 shares vested, all of which were
exercisable. The weighted average exercise price for these shares
was
$5.03 per share; the aggregate intrinsic value of these shares was
$341
and the weighted average remaining term was 6.0 years.
|
Range
of exercise prices
|
Number
outstanding
at
March 31,
2007
|
Weighted
average
remaining
contractual
life
(years)
|
Weighted
average
exercise
price
|
Number
exercisable
at
March 31, 2007
|
Weighted
average
exercise
price
|
||||||||||||
$2.80
- 4.58
|
160
|
5.56
|
4.35
|
106
|
4.33
|
||||||||||||
|
$4.96
- 5.74
|
190
|
7.54
|
5.34
|
68
|
5.37
|
|||||||||||
|
$7.18
- 8.00
|
17
|
0.15
|
8.00
|
17
|
8.00
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Service
revenue
|
77.1
|
%
|
81.0
|
%
|
78.1
|
%
|
79.0
|
%
|
|||||
Product
revenue
|
22.9
|
19.0
|
21.9
|
21.0
|
|||||||||
Total
revenue
|
100.0
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost
of service revenue (a)
|
79.8
|
67.2
|
78.4
|
71.8
|
|||||||||
Cost
of product revenue (a)
|
45.0
|
30.7
|
42.0
|
33.4
|
|||||||||
Total
cost of revenue
|
71.9
|
60.3
|
70.4
|
63.7
|
|||||||||
Gross
profit
|
28.1
|
39.7
|
29.6
|
36.3
|
|||||||||
Total
operating expenses
|
24.1
|
30.3
|
24.3
|
35.1
|
|||||||||
Operating
income
|
4.0
|
9.4
|
5.3
|
1.2
|
|||||||||
Other
expense
|
(1.9
|
)
|
(2.0
|
)
|
(2.0
|
)
|
(2.3
|
)
|
|||||
Income
(loss) before income taxes
|
2.1
|
7.4
|
3.3
|
(1.1
|
)
|
||||||||
Income
tax provision (benefit)
|
1.0
|
3.1
|
0.2
|
(0.3
|
)
|
||||||||
Net
income (loss)
|
1.1
|
%
|
4.3
|
%
|
3.1
|
%
|
(0.8
|
)%
|
2007
|
2008
|
2009
|
2010
|
2011
|
After
2011
|
Total
|
||||||||||||||||
Capital
expenditures
|
$
|
200
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
200
|
||||||||
Mortgage
notes payable
|
183
|
|
384
|
|
407
|
|
431
|
|
456
|
|
6,507
|
8,368
|
||||||||||
Subordinated
debt
|
—
|
4,477
|
—
|
—
|
—
|
—
|
4,477
|
|||||||||||||||
Capital
lease obligations
|
241
|
510
|
553
|
453
|
132
|
—
|
1,889
|
|||||||||||||||
Operating
leases
|
1,042
|
491
|
69
|
8
|
—
|
—
|
1,610
|
|||||||||||||||
$
|
1,666
|
$
|
5,862
|
$
|
1,029
|
$
|
892
|
$
|
588
|
$
|
6,507
|
$
|
16,544
|
MATTER:
|
VOTES
CAST FOR
|
VOTES
CAST
AGAINST
|
ABSTENTION
|
|||||||
Election
of the directors of BASi:
|
||||||||||
Peter
T. Kissinger
|
4,275,694
|
413,767
|
202,666
|
|||||||
Candice
B. Kissinger
|
4,393,649
|
295,812
|
202,666
|
|||||||
William
E. Baitinger
|
4,616,280
|
73,181
|
202,666
|
|||||||
David
W. Crabb
|
4,673,880
|
15,581
|
202,666
|
|||||||
Leslie
B. Daniels
|
4,682,469
|
6,992
|
202,666
|
Number
assigned
in
Regulation S-K
Item
601
|
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. †
|
||
(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
|
Employment
Agreement by and among Bioanalytical Systems, Inc. and Richard M.
Shepperd, entered into on, January 11, 2007 to be effective October
2,
2006 (incorporated by reference to Exhibit 10.1 of Form 8-K filed
January
17, 2007).
|
|
(31)
|
31.1
|
Certification
of Richard M. Shepperd †
|
|
31.2
|
Certification
of Michael R. Cox †
|
||
(32)
|
32.1
|
Section
1350 Certifications †
|