2. MANAGEMENT’S PLAN

The Company’s unaudited interim condensed consolidated financial statements were prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments to reflect possible future effects on the recoverability and classification of assets and liabilities that may result in the event the Company’s plans, including plans to rectify our liquidity issues, are not successful. As noted above, we are currently in default of our credit arrangements and Huntington Bank has reserved all rights with respect to our default. The Company’s liquidity circumstances, including the potential inability to find replacement financing, raise substantial doubt about the Company’s ability to continue as a going concern, and management has and will continue to take measures to mitigate that possibility.

The Company is engaged in exploring initiatives to address solutions to our liquidity issues, which include the evaluation and pursuit of various sources of financing, including a sale and leaseback of the West Lafayette facility. Management is also undergoing a detailed review of all current account management and acquisition strategies and market programs and has introduced new initiatives designed to increase revenue around focused strength areas. These key areas of expertise include increasing our IND-enabling studies in nonhuman primates, partnering with clinics for sample analysis and sample kit preparation, offering bioequivalence study expertise to our generics clients and increasing market awareness and adoption of the BASi Culex™ In-vivo Automated Blood Sampling System and related consumables via equipment grants. Management has been, and continues to be, actively engaged in more effectively controlling operating costs in the short term as we strive for long term stabilization and growth.