10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

OR

o 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 0-23357

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer o Non-accelerated Filer x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes o NO x

As of April 30, 2007, 4,909,127common shares of the registrant were outstanding.

		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

2

Part I. Financial Statements

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	(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

See accompanying notes to condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	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

See accompanying notes to condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	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

See accompanying notes to condensed consolidated financial statements.

5

BIOANALYTICAL SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Description of the Business and Basis of Presentation

Bioanalytical Systems, Inc. and its subsidiaries (“We,” the "Company" or “BASi”) engage in laboratory services and other services related to pharmaceutical development. We also manufacture scientific instruments for medical research, which we sell with related software for use in industrial, governmental and academic laboratories. Our customers are located throughout the world.

We have prepared the accompanying unaudited interim condensedconsolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”), and therefore should be read in conjunction with our audited consolidated financial statements, and the notes thereto, for the year ended September 30, 2006. In the opinion of management, the condensed consolidated financial statements for the three and six months ended March 31, 2007 and 2006 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of our financial position at March 31, 2007. The results of operations for the three and six months ended March 31, 2007 are not necessarily indicative of the results for the year ending September 30, 2007.

All amounts in the condensed consolidated financial statements and the notes thereto are presented in thousands, except for per share data or where otherwise noted.

2.Stock Based Compensation

At March 31, 2007, we had stock-based employee and outside director compensation plans, which are described more fully in Note 8 in the Notes to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2006. All options granted under these plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. Effective October 1, 2005, we began expensing the estimated fair value of stock options over the vesting periods of the grants, in accordance with Financial Accounting Standard 123 (Revised). Utilizing Modified Prospective Application, we expensed that portion of the estimated fair value of awards at grant date related to the outstanding options that vested during the period. The assumptions used are detailed in Note 1(f) to our financial statements in our Annual Report on Form 10-K for the year ended September 30, 2006. Stock based compensation expense for the three months and six months ended March 31, 2007 was $50 and $93, respectively, and compensation expense for the three months and six months ended March 31, 2006 was $71 and $139, respectively. We did not record any tax benefit related to these options.

There were no options granted in the fiscal year ended September 30, 2006. The assumptions used in computing our stock based compensation expense for options granted in the six months ended March 31, 2007 were as follows:

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

3.Income (Loss) per Share

We compute basic income/(loss) per share using the weighted average number of common shares outstanding. We compute diluted income/(loss) per share using the weighted average number of common and potential common shares outstanding. Potential common shares include the dilutive effect of shares issuable upon exercise of options to purchase common shares. Shares issuable upon conversion of convertible subordinated debt have not been included as they were not dilutive. No shares issuable upon exercise of options or conversion of debt are included in the computation of loss per share for the six months ended March 31, 2006 as they are anti-dilutive.

6

The following table reconciles our computation of basic income/(loss) per share to diluted income/(loss) per share:

	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	)

4.Inventories

Inventories consisted of the following:

	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

5.Segment Information

We operate in two principal segments - research Services and research Products. Our Services segment provides research and development support on a contract basis directly to pharmaceutical companies. Our Products segment provides liquid chromatography, electrochemical and physiological monitoring products to pharmaceutical companies, universities, government research centers and medical research institutions. Our accounting policies in these segments are the same as those described in the summary of significant accounting policies found in Note 1 to Consolidated Financial Statements in our annual report on Form 10-K for the year ended September 30, 2006.

7

The following table presents operating results by segment:

	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	)

6. Asset Held for Resale

On April 9, 2007 we sold a building and lot adjacent to our facility in West Lafayette, IN that was not being utilized in our operations, recognizing a loss on the sale of $98. The loss was recorded in our results for the three and six months ended March 31, 2007. The net realizable value of the asset is shown as Asset Held for Resale in our balance sheet at March 31, 2007.

7. Income Taxes

We computed income taxes using an overall effective tax rate of 41.5% on our consolidated domestic income, which is our estimate of our combined federal and local tax rates for the current fiscal year. In the six months ended March 31, 2007 we did not provide income taxes on foreign earnings due to the availability of net operating loss carryforwards to offset our taxable income, which have not previously been recognized for financial statement purposes.

8. Stock Option Plans

The Company established an Employee Stock Option Plan whereby options to purchase the Company’s common shares at fair market value at date of grant can be granted to our employees. Options granted become exercisable in four equal annual installments beginning two years after the date of grant. This plan terminates in fiscal 2008.

The Company also established an Outside Director Stock Option Plan whereby options to purchase the Company’s common shares at fair market value at date of grant can be granted to outside directors. Options granted become exercisable in four equal annual installments beginning two years after the date of grant. This plan terminates in fiscal 2008.

Options in both plans expire the earlier of ten years from grant date or termination of employment.

A summary of our stock option activity and related information for the six months ended March 31, 2007 is as follows:

	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

8

The intrinsic values of options exercised in the six months ended March 31, 2007 were $10. We received $76 from their exercise, for which no tax benefit was recognized. The options on the 367 shares outstanding at March 31, 2007 had an aggregate intrinsic value of $636 and a weighted average contract term of 6.3 years.

A summary of non-vested options for the six months ended March 31, 2007 is as follows:

	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.

At March 31, 2007, there were 320 shares available for grants under the two plans.

The following applies to options outstanding at March 31, 2007:

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

At March 31, 2007, we had $150 of compensation expense to be recognized for non-vested options with a weighted average vesting period of 1.55 years.

9.Recently Issued Accounting Standards

In February, 2007 the Financial Accounting Standards Board (“FASB’) issued FASB Statement Number 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This statement allows the use of fair values for certain financial instruments in financial statements for years beginning after November 15, 2007. While we have not completed an evaluation of the impact of electing to use fair values for valuing these items in our financial statements, it does not appear likely that we will elect to use the fair values allowed in this statement.

9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q may contain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and/or Section 21E of the Securities Exchange Act of 1934, as amended. Those statements may include, but are not limited to, discussions regarding BASi's intent, belief or current expectations with respect to (i) BASi's strategic plans; (ii) BASi's future profitability; (iii) BASi's capital requirements; (iv) industry trends affecting the Company's financial condition or results of operations; (v) the Company's sales or marketing plans; or (vi) BASi's growth strategy. Investors in BASi's Common Shares are cautioned that reliance on any forward-looking statement involves risks and uncertainties, including the risk factors contained in BASi’s annual report on Form 10-K for the year ended September 30, 2006. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based upon those assumptions also could be incorrect. In light of the uncertainties inherent in any forward-looking statement, the inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that BASi's plans and objectives will be achieved.

GENERAL

The business of Bioanalytical Systems, Inc. is very much dependent on the level of pharmaceutical and biotech companies’ efforts in new drug discovery and approval. Our Services segment is the direct beneficiary of these efforts, through outsourcing of laboratory and analytical needs, and our Products segment is the indirect beneficiary, as increased drug development leads to capital expansion, providing opportunities to sell the equipment we produce and the consumable supplies we provide that support our products.

In our Annual Report on Form 10-K for the year ended September 30, 2006, we commented on the impacts and anticipated impacts developments in the pharmaceutical industry have on our businesses, as well as the material potential risks posed to our business by these industries. Those comments are still applicable, and are found under “General” in Part I, Item 2 of that report.

RESULTS OF OPERATIONS

The following table summarizes the consolidated statement of operations as a percentage of total revenues:

	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	)%

(a) Percentage of service and product revenues, respectively.

10

Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006

Service and Product Revenues

Revenues for the second fiscal quarter ended March 31, 2007 decreased 9% to $11.3 million compared to $12.4 million for the second quarter last year. Our Service segment revenue decreased by 13% from $10.1 million to $8.7 million compared to the comparable period last year. This was primarily the result of a decline in revenues in our bioanalytical laboratories, where revenues in the year earlier quarter were particularly strong due to a large study in that quarter that had been rescheduled from an earlier quarter. Our toxicology revenues increased $0.4 million (a 10% increase), reflecting the continued health of our toxicology operations. Revenue in our Baltimore clinic increased 4% over the comparable quarter last year, reflecting our continuing effort to cultivate new clients for these services. Sales in our Products segment increased 9.3% from $2.4 million in our second fiscal quarter last year to $2.6 million in the current quarter. Sales of our Culex automated pharmacology systems showed continued strength posting a $0.5 million increase over the same period last year. The Culex systems improvement in sales was offset by declines in our more mature products.

Cost of Revenues

Cost of revenues for the second quarter ended March 31, 2007 was $8.1 million or 72% of revenue compared to $7.5 million, or 60% of revenue for the second quarter last year. Our cost of Service revenue as a percentage of Service revenue increased from 67% in the second fiscal quarter last year to 80% in the quarter ended March 31, 2007. A substantial portion of our cost of productive capacity (personnel, facilities and laboratory equipment) is relatively fixed, resulting in a higher cost of services as a percentage of sales when compared to the same period a year ago due to the revenue decrease. The revenue decrease did not create a corresponding decrease in the costs of productive capacity. In addition, we transferred our pre-clinical services payroll related costs from our research group to cost of services. Similarly, our costs of Product revenue as a percentage of Product revenue increased from 31% to 45%. A substantial portion of products shipped in the quarter ended March 31, 2007 were manufactured in the prior quarter, with manufacturing activity lower in the current fiscal quarter. This resulted in under-absorption of manufacturing costs in the current quarter, which is included in cost of products and raises the percentage of costs compared to sales.

Operating Expenses

Selling expenses for the three months ended March 31, 2007 decreased 1% to $673 thousand from $680 thousand for the three months ended March 31, 2006. There were no significant changes in our sales efforts between the comparable quarters. Research and development expenses for the three months ended March 31, 2007 decreased 50% to $101 thousand from $201 thousand for the three months ended March 31, 2006 as a result of $118 thousand of payroll costs related to the commercialization of our pharmacokinetics and pharmacodynamics services being transferred from our research group to cost of services in the current quarter.

General and administrative expenses for the three months ended March 31, 2007 decreased 35% to $1.9 million, down from $2.9 million for the three months ended March 31, 2006. The major contributors to our cost reduction were the strategic reduction in personnel in September 2006, the impairment charge taken on the Baltimore clinic in fiscal 2006 reducing our expenses in the current year, and a shift to utilization of temporary personnel in the Baltimore clinic which enables us to reduce personnel costs when the clinic is not occupied. We also recorded a loss of $98 thousand on the sale of an excess building adjacent to our main facility in West Lafayette, IN.

Other Income (Expense)

Our interest expense declined $18 thousand to $230 thousand due to lower average outstanding borrowings between the comparable quarters, in spite of higher short term rates in the current quarter. A significant amount of our borrowings are at fixed rates that did not change between the comparable quarters.

Income Taxes

We computed our tax provision for the current quarter using an overall effective tax rate of 41.5% on domestic earnings, which is our combined federal and local rate. We were able to utilize tax loss carryforwards available on our foreign earnings and therefore provided no related income tax expense.

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Net Income (Loss)

As a result of the above factors, we had income of $124 thousand ($0.03 per share, both basic and diluted) in the quarter ended March 31, 2007, compared to income of $538 thousand ($0.11 per share, both basic and diluted) in the same period last year.

Six Months Ended March 31, 2007 Compared to Six Months Ended March 31, 2006

Service and Product Revenues

Revenues for the six months ended March 31, 2007 were relatively unchanged: $22.2 million as compared to $22.3 million for the six month period last year. Service revenue decreases of 2% were the result of a decline in our Baltimore clinical research unit revenues of $1.4 million due to the loss of a significant customer in our second fiscal quarter of 2006. This decrease was partially offset by increases of $0.3 million and $0.2 million in our U.K. and Oregon bioanalytical laboratories respectively, along with an increase of $0.4 million in toxicology revenues. Revenues for our Products increased 4% for the six months, due to the items cited in the current quarter.

Cost of Revenues

Cost of revenues for the six months ended March 31, 2007 was $15.6 million or 70% of revenue compared to $14.2 million, or 64% of revenue for the same period last year. Both the cost of Service revenue and the cost of Product revenue increased as a percentage of Service revenues and Product revenues, respectively, due to the items cited in the current quarter.

Operating Expenses

Selling expenses for both the six months ended March 31, 2007 and the six months ended March 31, 2006 were unchanged at $1.4 million each. Research and development expenses for the six months ended March 31, 2007 decreased 29% to $456 thousand from $639 thousand for the six months ended March 31, 2006, due to personnel previously charged to research and development now being charged to cost of services as we commercialize our pharmacokinetics and pharmacodynamics services, which had previously been in development.

General and administrative expenses for the six months ended March 31, 2007 decreased 39% to $3.5 million, down from $5.8 million for the six months ended March 31, 2006 due to items cited in the current quarter.

Other Income (Expense)

Interest expense decreased 7% from $508 thousand to $471 thousand in the six months ended March 31, 2007 from the comparable period of the prior year as a result of reduced average outstanding borrowings.

Income Taxes

We computed our income tax using an effective tax rate of 41.5% on domestic earnings for the six months ended March 31, 2007. We did not provide income taxes on foreign earnings due to the availability of net operating loss carryforwards to offset our taxable income, which have not previously been recognized for financial statement purposes. The income tax benefit for the six months ended March 31, 2006 was computed using an effective tax rate of 42.5% on the US taxable losses, the effective benefit was reduced by an accrual for an additional $30 thousand for settlement of a disputed state tax liability.

Net Income (Loss)

As a result of the above, we had income of $680 thousand ($0.14 per share, both basic and diluted) for the first six months of the current year, compared to a net loss in the prior year of $178 thousand ($0.04 loss per share, both basic and diluted).

12

LIQUIDITY AND CAPITAL RESOURCES

Comparative Cash Flow Analysis

Since its inception, BASi’s principal sources of cash have been cash flow generated from operations and funds received from bank borrowings and other financings. At March 31, 2007 we had cash and cash equivalents of $1.4 million, compared to cash and cash equivalents of $1.6 million at September 30, 2006. Approximately 26% of our cash balances were in the U.K at March 31, 2007 as compared to 60% at March 31, 2006. We monitor our U.K. cash needs to avoid currency conversion costs, which in the current interest rate environment can exceed interest.

Our net cash provided by operating activities was $0.4 million for the six months ended March 31, 2007 compared to $1.1 million for the six months ended March 31, 2006. This was the result of the earnings to which is added our non-cash charges for depreciation and amortization, offset by receivables balances increasing as a result of new contracts, a building held for resale, and working down the balances in customer deposits and accrued expenses. The impact on cash flow of other changes in operating assets and liabilities was not material.

Net cash provided by investing activities was $0.3 million in the six months ended March 31, 2007 as a result of the netting of disposals (including a building in West Lafayette) against routine equipment purchases. Additionally, we repaid $0.8 million of principal on our long-term debt and capital leases in the six months ended March 31, 2007.

Capital Resources

We have a $6.0 million revolving credit agreement with a commercial bank which extends until December 31, 2007. We may utilize up to that amount based upon our qualifying inventory and accounts receivable. We are in discussions with our bank to extend this facility beyond its expiration date.

We have an outstanding letter of credit securing our lease on our Baltimore facility for $1.0 million, which expires in January 2008. The letter of credit reduces our amounts available under our revolving credit facility.

We have $4.0 million of convertible subordinated debt, which becomes due on January 1, 2008. Accordingly, the entire amount is presented in current portion of long-term debt in the balance sheet at March 31, 2007. The debt is convertible at $16 per share into common stock, a conversion price that makes it unlikely to be converted before its maturity. This debt is subordinated to our bank debt, and cannot be repaid without the consent of our senior lenders. We are currently exploring options to refinance this debt, including acquiring additional mortgage debt, extending the terms of the debt, and obtaining funds by a private placement of debt or equity securities.

We expect our total capital additions in fiscal 2007 to be in the range of $1.0 million to $1.2 million. We expect to fund these capital expenditures from operating cash flow.

Liquidity

We do not foresee the need to borrow extensively under our revolving credit agreement to finance current operations, except for periods when rapid growth of new business may necessitate borrowing to finance the buildup of receivables and inventory.

At March 31, 2007, we had $1.4 million in cash, and approximately $4.0 million available under our revolving credit facility.

Our revolving line of credit expires December 31, 2007. The maximum amount available under the terms of the agreement is $6.0 million with outstanding borrowings limited to the borrowing base as defined in the agreement. Interest accrues monthly on the outstanding balance at the bank's prime rate to prime rate plus 50 basis points, or at the LIBOR rate plus 325 basis points, at our election. We pay a facility fee equal to 37.5 basis points on the unused portion of the line of credit. We have certain financial ratio covenants in our loan agreement, all of which were met in the quarter ended March 31, 2007.

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We are required to make cash payments in the future on debt and lease obligations. The following table summarizes BASi's contractual term debt, lease obligations and other commitments at March 31, 2007 and the effect such obligations are expected to have on our liquidity and cash flows in future periods (amounts presented for 2007 are those items required in the final two quarters):

	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

For further details on our indebtedness, see Note 7 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2006.

The covenants in the Company's credit agreement requiring the maintenance of certain ratios of interest bearing indebtedness (not including subordinated debt) to EBITDA and net cash flow to debt servicing requirements may restrict the amount the Company can borrow to fund future operations, acquisitions and capital expenditures. Based on our current business activities, we believe cash generated from our operations and amounts available under our existing credit facilities and cash on hand, will be sufficient to fund the Company's working capital and capital expenditure requirements for the foreseeable future. As discussed above, in January, 2008 our subordinated notes of $4.0 million from a 2003 acquisition become due. We are exploring various alternatives to fund that obligation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

BASi’s primary market risk exposure with regard to financial instruments is changes in interest rates. Borrowings under the Revolving Credit Agreement between BASi and National City Bank dated January 4, 2005 bear interest at a rate of either the bank’s prime rate plus 50 basis points, or at the LIBOR rate plus 325, at BASi’s option. We have fixed our interest rate on our mortgage debt through May, 2007.

BASi has not used derivative financial instruments to manage exposure to interest rate changes. BASi estimates that a hypothetical 10% adverse change in interest rates would not affect the consolidated operating results of BASi by a material amount.

BASi operates internationally and is, therefore, subject to potentially adverse movements in foreign currency exchange rates. The effect of movements in the exchange rates was not material to the consolidated operating results of BASi in fiscal years 2006 and 2005. BASi estimates that a hypothetical 10% adverse change in foreign currency exchange rates would not affect the consolidated operating results of BASi by a material amount in fiscal year 2007.

ITEM 4. CONTROLS AND PROCEDURES

Based on their most recent evaluation, the Company's Chief Executive Officer and Chief Financial Officer believe that the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of March 31, 2007 to ensure that information required to be disclosed by the Company in this Form 10-Q was recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms.

There were no significant changes in the Company’s internal controls or other factors that could significantly affect those controls subsequent to the date of their evaluation, which was completed as of September 30, 2006.

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PART II - OTHER INFORMATION

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

On February 15, 2007, the Annual Meeting of Shareholders of BASi was held at the principal executive offices of BASi. The following matters were voted on at the meeting:

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

ITEM 6. EXHIBITS

Exhibits

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 †

† Filed with this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements 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:

BIOANALYTICAL SYSTEMS, INC.

By:  /s/ RICHARD M. SHEPPERD 

Richard M. Shepperd

Chief Executive Officer

(Principal Executive Officer)

Date: May 9, 2007

By:  /s/ MICHAEL R. COX

Michael R. Cox

Vice President-Finance

and Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: May 9, 2007

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EX-3.2

AMENDED AND RESTATED BYLAWS OF

BIOANALYTICAL SYSTEMS, INC.

(Including Amendments through May 9, 2007)

ARTICLE I.

Records Pertaining To Share Ownership

Section 1.1.Recognition of Shareholders. Bioanalytical Systems, Inc. (the "Corporation") is entitled to recognize a person registered on its books as the owner of shares of the Corporation as having the exclusive right to receive dividends and to vote those shares, notwithstanding any other person's equitable or other claim to, or interest in, those shares.

Section 1.2.Transfer of Shares. Shares are transferable only on the books of the Corporation, subject to any transfer restrictions imposed by the Articles of Incorporation, these Bylaws, or an agreement among shareholders and the Corporation. The Board may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. Shares may be so transferred either (a) upon presentation of the certificate representing the shares, endorsed by the appropriate person or persons, and accompanied by (i) reasonable assurance that those endorsements are genuine and effective, and (ii) a request to register the transfer; or (b) in any manner described in any rule or regulation promulgated by the Board under this Section 1.2. Transfers of shares are otherwise subject to the provisions of the Indiana Business Corporation Law (the "Act"), Article 8 of the Indiana Uniform Commercial Code and federal securities laws.

Section 1.3.Certificates. Each shareholder is entitled to a certificate signed (manually or in facsimile) by the President or a Vice President and the Secretary or an Assistant Secretary, setting forth (a) the name of the Corporation and that it was organized under Indiana law, (b) the name of the person to whom issued, (c) the number, class, and series of shares represented, and (d) a conspicuous statement that the Corporation will furnish to the holder of the certificate on request, in writing, and without charge, a summary of the designations, relative rights, preferences, and limitations applicable to each such class of shares, and the variations in rights, preferences, and limitations determined for each series within a class (and the authority of the Board of Directors to determine variations for future series). The Board of Directors shall prescribe the form of the certificate. Notwithstanding the foregoing, the Board of Directors may determine for any reason, including, for example, to qualify for any direct registration program, that some or all of any class and/or series of shares may be uncertificated; provided, however, that no such determination shall apply to any shares represented by a certificate until the certificate is surrendered in accordance with Section 1.2.

Section 1.4.Lost or Destroyed Certificates. A new certificate may be issued to replace a lost or destroyed certificate. Unless waived by the Board of Directors, the shareholder in whose name the certificate was issued shall make an affidavit or affirmation of the fact that the certificate is lost or destroyed, shall advertise the loss or destruction in such manner as the Board of Directors may require, and shall give the Corporation a bond of indemnity in the amount and form which the Board of Directors may prescribe.

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ARTICLE II.

Meetings of the Shareholders

Section 2.1.Annual Meetings. Annual meetings of the shareholders shall be held on the second Monday in February of each year, or on such other date as may be designated by the Board of Directors.

Section 2.2.Special Meetings. Special meetings of the shareholders may be called by the President or by the Board of Directors. Special meetings of the shareholders shall be called upon delivery to the Secretary of the Corporation of one or more written demands for a special meeting of the shareholders describing the purposes of that meeting and signed and dated by the holders of at least 25% of all the votes entitled to be cast on any issue proposed to be considered at that meeting.

Section 2.3.Notice of Meetings. The Corporation shall deliver or mail written notice stating the date, time, and place of any shareholders' meeting and, in the case of a special shareholders' meeting or when otherwise required by law, a description of the purposes for which the meeting is called, to each shareholder of record entitled to vote at the meeting, at such address as appears in the records of the Corporation and at least 10, but no more than 60, days before the date of the meeting. A shareholders' meeting shall be held at such place, either in or out of the State of Indiana, as may be specified by the Board of Directors in the respective notice for such meeting.

Section 2.4.Waiver of Notice. A shareholder may waive notice of any meeting, before or after the date and time of the meeting as stated in the notice, by delivering a signed waiver to the Corporation for inclusion in the minutes. A shareholder's attendance at any meeting, in person or by proxy (a) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) waives objection to consideration of a particular matter at the meeting that is not within the purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

Section 2.5.Record Date. The Board of Directors may fix a record date, which may be a future date, for the purpose of determining the shareholders entitled to notice of a shareholders' meeting, to demand a special meeting, to vote, or to take any other action. A record date shall be at least 10, but not more than 70, days before the meeting or action requiring a determination of shareholders. If the Board of Directors does not fix a-record date, the record date shall be the 10th day prior to the date of the meeting or other action.

Section 2.6.Voting by Proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder pursuant to a written appointment form executed by the shareholder or the shareholder's duly authorized attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent of the Corporation authorized to tabulate votes. The general proxy of a fiduciary is given the same effect as the general proxy of any other shareholder. A proxy appointment is valid for 11 months unless otherwise expressly stated in the appointment form.

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Section 2.7.Voting Lists. Following the record date for a shareholders' meeting, the Secretary shall prepare an alphabetical list of all shareholders entitled to notice of the meeting, arranged by voting group and within each voting group by class and series, and showing the address and number of shares held by each shareholder. The list shall be kept on file at the principal office of the Corporation or at a place identified in the meeting notice in the city where the meeting will be held. The list shall be available for inspection and copying by any shareholder entitled to vote at the meeting, or by the shareholder's agent or attorney authorized in writing, at any time during regular business hours, beginning 5 business days before the date of the meeting through the meeting. The list shall also be made available to any shareholder, or to the shareholder's agent or attorney authorized in writing, at the meeting and any adjournment thereof. Failure to prepare or make available a voting list with respect to any shareholder's meeting shall not affect the validity of any action taken at such meeting.

Section 2.8.Quorum; Approval. At any meeting of shareholders, a majority of the votes entitled to be cast on a matter by a voting group at the meeting constitutes a quorum of that voting group. If a quorum of a voting group is present when a vote is taken, action on a matter is approved by that voting group if the votes cast in favor of the action exceed the votes cast in opposition to the action, unless a greater number is required by law, the Articles of Incorporation, or these Bylaws. If more than one voting group is entitled to vote on a matter, approval by each voting group is required for the matter to be approved by the shareholders as a whole.

ARTICLE III.

Board of Directors

Section 3.1.Powers and Duties. All corporate powers are exercised by or under the authority of, and the business and affairs of the Corporation are managed under the direction of, the Board of Directors, unless otherwise provided in the Articles of Incorporation.

Section 3.2.Number and Terms of Office; Qualifications. The Corporation shall have no fewer than seven and no greater than nine directors. Subject to the limitations contained in this Section 3.2, the number of directors may be fixed or changed from time to time by a majority vote of the Board of Directors. Directors are elected at each annual shareholders' meeting and serve for a term expiring at the following annual shareholders' meeting. A director who has been removed pursuant to Section 3.3 ceases to serve immediately upon removal; otherwise, a director whose term has expired continues to serve until a successor is elected and qualifies or until there is a decrease in the number of directors. A person need not be a shareholder or an Indiana resident to qualify to be a director.

Section 3.2.1Nomination of Directors. (a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of shareholders, or at any special meeting of shareholders called for the purpose of electing directors, (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any shareholder of the Corporation (1) who is a shareholder of record on the date of the giving of the notice provided for in this Section 3.2.1 and on the record date for the determination of shareholders entitled to notice of and to vote at such meeting and (2) who complies with the notice procedures set forth in this Section 3.2.1.

(b)In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

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(c)To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting; and (b) in the case of a special meeting of shareholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs.

(d)If mailed, such notice is given when deposited in the United States mail, with postage thereon prepaid, directed to the shareholder at his address as it appears on the record of shareholders. In the event of a change of address, such shareholder shall file with the Secretary of the Corporation a written request that such shareholder's address be changed in the records of the Corporation, in which event notices to such shareholder shall be directed to such shareholder at such other address.

(e)To be in proper written form, a shareholder's notice to the Secretary must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director (1) the name, age, business address and residence address of the person, (2) the principal occupation or employment of the person, (3) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person, and (4) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (ii) as to the shareholder giving the notice (1) the name and record address of such shareholder, (2) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, (3) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (4) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, and (5) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

(f)No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.2.1. The Chair of the Nominating Committee or his or her designee shall have the authority to determine whether a nomination is properly made in accordance with the foregoing procedures. If the Chair of the Nominating Committee or his or her designee determines that a nomination was not made in accordance with the foregoing procedures, the chairman of the meeting shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Section 3.3.Removal. Subject to any limitations on, and requirements for, removal of directors contained in the Articles of Incorporation, any director may be removed with or without cause by action of the shareholders taken at any meeting the notice of which states that one of the purposes of the meeting is removal of the director.

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Section 3.4.Vacancies. Subject to any provisions concerning the filling of vacancies contained in the Articles of Incorporation, if a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors, the Board of Directors may fill the vacancy; and if the directors remaining in office constitute fewer than a quorum of the Board, the directors remaining in office may fill the vacancy by the affirmative vote of a majority of those directors. Any director elected to fill a vacancy holds office until the next annual meeting of the shareholders and/or until a successor is elected and qualifies.

Section 3.5.Annual Meetings. Unless otherwise agreed by the Board of Directors, the annual meeting of the Board of Directors shall be held immediately following the annual meeting of the shareholders, at the place where the meeting of shareholders was held, for the purpose of electing officers and considering any other business which may be specifically set forth in the notice of the meeting.

Section 3.6.Regular and Special Meetings. Regular meetings of the Board of Directors may be held pursuant to a resolution of the Board of Directors establishing a method for determining the date, time, and place of those meetings. Special meetings of the Board of Directors may be held upon the call of the President or of any one director.

Section 3.7.Notice and Agenda. Notice of a meeting may be waived in writing before or after the time of the meeting. The waiver must be signed by the director entitled to the notice and filed with the minutes of the meeting. A director's attendance at or participation in a meeting waives any required notice of the meeting, unless at the beginning of the meeting (or promptly upon the director's arrival) the director objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. All notices of a meeting of the Board of Directors shall include an agenda specifically setting forth in reasonable detail any and all matters to be officially acted upon at such meeting.

Section 3.8.Quorum. A quorum for the transaction of business at any meeting of the Board of Directors consists of a majority of the number of directors then in office. In all cases, except as otherwise expressly required by the Act or the Articles of Incorporation, the approval or consent of a majority of the directors then in office shall be required in order to authorize or approve actions or other matters presented to the Board of Directors.

Section 3.9.Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all directors then in office. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes. Action of the Board of Directors taken by consent is effective when the last director signs the consent, unless the consent specifies a prior or subsequent effective date.

Section 3.10.Committees. The Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on them. Each committee may have one or more members, who serve at the pleasure of the Board of Directors. All rules applicable to action by the Board of Directors apply to committees and their members. The Board of Directors may specify the authority that a committee may exercise; however, a committee may not (a) authorize distributions, except a committee may authorize or approve a reacquisition of shares if done according to a formula or method prescribed by the Board of Directors, (b) approve or propose to shareholders action that must be approved by shareholders, (c) fill vacancies on the Board of Directors or on any of its committees, (d) amend the Articles of Incorporation, (e) adopt, amend, or repeal these Bylaws, (f) approve a plan of merger not requiring shareholder approval, or (g) authorize or approve the issuance or sale or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares.

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Section 3.11.Presence. The Board of Directors may permit any or all directors to participate in any annual, regular, or special meeting by any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director so participating is deemed to be present in person at the meeting.

Section 3.12.Compensation. Each director shall receive such compensation for service as a director as may be fixed by the Board of Directors.

ARTICLE IV.

Officers

Section 4.1.Officers. The Corporation shall have a Chairman of the Board, a President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers as the Board of Directors or the President designates. The Board of Directors or the President may designate one or more Vice Presidents to serve as Executive Vice Presidents or Senior Vice Presidents. The same individual may simultaneously hold more than one office.

Section 4.2.Terms of Office. Officers are elected at each annual meeting of the Board of Directors and serve for a term expiring at the following annual meeting of the Board of Directors. An officer who has been removed pursuant to Section 4.4 ceases to serve as an officer immediately upon removal; otherwise, an officer whose term has expired continues to serve until a successor is elected and qualifies.

Section 4.3.Vacancies. If a vacancy occurs among the officers, the Board of Directors may fill the vacancy. Any officer elected to fill a vacancy holds office until the next annual meeting of the Board of Directors and until a successor is elected and qualifies.

Section 4.4.Removal. Any officer may be removed by the Board of Directors at any time with or without cause.

Section 4.5.Compensation. Each officer shall receive such compensation for service in office as may be fixed by the Board of Directors.

Section 4.6.President. The President is the chief executive officer of the Corporation and is responsible for managing and supervising the affairs and personnel of the Corporation, subject to the general control of the Board of Directors. The President, or proxies appointed by the President, may vote shares of other corporations owned by the Corporation. The President has authority to execute, with the Secretary (as required), powers of attorney appointing other corporations, partnerships, entities or individuals as the agents of the Corporation, subject to law, the Articles of Incorporation and these Bylaws. The President has such other powers and duties as the Board of Directors may from time to time prescribe. The President has such other powers and duties as the Board of Directors may from time to time prescribe.

Section 4.7.Vice Presidents. The Vice Presidents shall have such powers and perform such duties as the President and the Board of Directors may from time to time prescribe. The Vice Presidents (in order of seniority) shall have all the powers of, and perform all the duties incumbent upon, the President during the President's absence or disability.

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Section 4.8.Secretary. The Secretary is responsible for (a) attending all meetings of the shareholders and the Board of Directors, (b) preparing true and complete minutes of the proceedings of all meetings of the shareholders, the Board of Directors, and all committees of the Board of Directors, (c) maintaining and safeguarding the books (except books of account) and records of the Corporation, and (d) authenticating the records of the Corporation. If required, the Secretary attests the execution of deeds, leases, agreements, powers of attorney, certificates representing shares of the Corporation, and other official documents by the Corporation. The Secretary serves all notices of the Corporation required by law, the Board of Directors, or these Bylaws. The Secretary has such other duties as the Board of Directors may from time to time prescribe.

Section 4.9.Treasurer. The Treasurer is responsible for (a) keeping correct and complete books of account which show accurately at all times the financial condition of the Corporation, (b) safeguarding all funds, notes, securities, and other valuables which may from time to time come into the possession of the Corporation, and (c) depositing all funds of the Corporation with such depositories as the Board of Directors shall designate. The Treasurer shall furnish at meetings of the Board of Directors, or when otherwise requested, a statement of the financial condition of the Corporation. The Treasurer has such other duties as the Board of Directors may from time to time prescribe.

Section 4.10.Other Officers. The Board of Directors or the President may from time to time designate and elect other officers (including assistant officers) who shall have such powers and duties as the President, the Board of Directors, or if assistant officer, the officers whom they are elected to assist, specify and delegate to them, and such other powers and duties as the Board of Directors or the President may from time to time prescribe. An Assistant Secretary may, during the absence or disability of the Secretary, discharge all responsibilities imposed upon the Secretary of the Corporation, including, without limitation, attest the execution of all documents by the Corporation.

Section 4.11.Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors and shall have such other duties, powers and responsibilities as are assigned to the Chairman of the Board by the Board of Directors from time to time.

ARTICLE V.

Miscellaneous

Section 5.1.Records. The Corporation shall keep as permanent records minutes of all meetings of the shareholders, the Board of Directors, and all committees of the Board of Directors, and a record of all actions taken without a meeting by the shareholders, the Board of Directors, and all committees of the Board of Directors. The Corporation or its agent shall maintain a record of the shareholders in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class of shares showing the number and class of shares held by each. The Corporation shall maintain its records in written form or in a form capable of conversion into written form within a reasonable time. The Corporation shall keep a copy of the following records at its principal office: (a) the Articles of Incorporation then currently in effect, (b) the Bylaws then currently in effect, (c) all resolutions adopted by the Board of Directors with respect to one or more classes or series of shares and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding, (d) minutes of all shareholders' meetings, and records of all actions taken by shareholders without a meeting, for the past 3 years, (e) all written communications to shareholders generally during the past 3 years, including annual financial statements furnished upon request of the shareholders, (f) a list of the names and business addresses of the current directors and officers, and (g) the most recent annual report filed with the Indiana Secretary of State.

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Section 5.2.Execution of Contracts and Other Documents. Unless otherwise authorized or directed by the Board of Directors, all written contracts and other documents entered into by the Corporation shall be executed on behalf of the Corporation by the President or a Vice President, and, if required, attested by the Secretary or an Assistant Secretary.

Section 5.3.Accounting Year. The accounting year of the Corporation begins on October l of each year and ends on the September 30 immediately following.

Section 5.4.Corporate Seal. The Corporation has no seal.

ARTICLE VI.

Amendment

These Bylaws may be amended or repealed only by the Board of Directors.

9

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Richard M. Shepperd, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bioanalytical Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [clause omitted pursuant to SEC Release Nos. 33-8238 and 34-47986] for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 9, 2007	/s/ Richard M. Shepperd
	Richard M. Shepperd Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Michael R. Cox, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bioanalytical Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [clause omitted pursuant to SEC Release Nos. 33-8238 and 34-47986] for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2007	/s/ Michael R. Cox
	Michael R. Cox Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard M. Shepperd, the Chief Executive Officer of Bioanalytical Systems, Inc. certify that (i) the Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of BASi as of the dates and for the periods set forth therein.

/s/ Richard M. Shepperd

Richard M. Shepperd

Chief Executive Officer

Date: May 9, 2007

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael R. Cox, Vice President, Finance and Chief Financial Officer of Bioanalytical Systems, Inc. certify that (i) the Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of BASi as of the dates and for the periods set forth therein.

/s/ Michael R. Cox

Michael R. Cox

Vice President, Finance

and Chief Financial Officer

Date: May 9, 2007

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