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, 2019

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 000-23357

BIOANALYTICAL SYSTEMS, INC.

(Exact name of the registrant as specified in its charter)

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)

(Former name, former address and former fiscal year, if changed since last report)

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 ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES x   NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o    Accelerated filer o    Non-accelerated filer x    Smaller Reporting Company x    Emerging growth company o   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o   

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

YES o    NO x

Securities registered pursuant to Section 12(b) of the Act

		Name of each exchange
Title of each class	Trading Symbol(s)	on which registered
Common Shares	BASi	NASDAQ Capital Market

As of May 10, 2019, 10,290,531 of the registrant's common shares were outstanding.

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2019 (Unaudited) and September 30, 2018	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended March 31, 2019 and 2018 (Unaudited)	4
	Consolidated Statement of Shareholders’ Equity for the Three and Six Months Ended March 31, 2019 and 2018 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2019 and 2018 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4	Controls and Procedures	26
PART II	OTHER INFORMATION
Item 1A	Risk Factors	27
Item 6	Exhibits	28
	Signatures	29

2

BIOANALYTICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31, 2019			September 30, 2018
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	520		$	773
Accounts receivable
Trade, net of allowance of $1,891 at March 31, 2019 and $1,948 at September 30, 2018		4,149			4,128
Unbilled revenues and other		716			1,012
Inventories, net		1,103			1,182
Prepaid expenses		1,194			966
Total current assets		7,682			8,061
Property and equipment, net		17,787			16,610
Goodwill		3,072			3,072
Other intangible assets, net		3,060			3,318
Lease rent receivable		124			115
Deferred tax asset		31			62
Other assets		27			30
Total assets	$	31,783		$	31,268
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,525		$	3,192
Restructuring liability		503			1,117
Accrued expenses		1,230			1,571
Customer advances		5,583			4,925
Revolving line of credit		409			-
Current portion of capital lease obligation		20			87
Current portion of long-term debt		930			909
Total current liabilities		12,200			11,801
Capital lease obligation, less current portion		28			37
Long-term debt, less current portion, net of debt issuance costs		9,265			8,546
Total liabilities		21,493			20,384
Shareholders’ equity:
Preferred shares, authorized 1,000,000 shares, no par value:
35 Series A shares at $1,000 stated value issued and outstanding at March 31, 2019 and at September 30, 2018		35			35
Common shares, no par value:
Authorized 19,000,000 shares; 10,290,531 issued and outstanding at March 31, 2019 and 10,245,277 at September 30, 2018		2,534			2,523
Additional paid-in capital		24,682			24,557
Accumulated deficit		(16,961	)		(16,231	)
Total shareholders’ equity		10,290			10,884
Total liabilities and shareholders’ equity	$	31,783		$	31,268

The accompanying notes are an integral part of the condensed consolidated financial statements

3

BIOANALYTICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Service revenue	$	8,131		$	5,030		$	15,866		$	9,555
Product revenue		1,213			914			2,103			1,766
Total revenue		9,344			5,944			17,969			11,321
Cost of service revenue		5,951			3,662			11,548			6,935
Cost of product revenue		832			542			1,441			1,065
Total cost of revenue		6,783			4,204			12,989			8,000
Gross profit		2,561			1,740			4,980			3,321
Operating expenses:
Selling		655			303			1,308			597
Research and development		145			149			269			288
General and administrative		2,210			1,178			3,811			2,315
Total operating expenses		3,010			1,630			5,388			3,200
Operating (loss) income		(449	)		110			(408	)		121
Interest expense		(122	)		(48	)		(248	)		(100	)
Other income		3			4			4			4
Net (loss) income before income taxes		(568	)		66			(652	)		25
Income taxes (benefit) expense		1			11			2			(56	)
Net (loss) income	$	(569	)	$	55		$	(654	)	$	81
Comprehensive (loss) income	$	(569	)	$	55		$	(654	)	$	81
Basic net (loss) income per share	$	(0.06	)	$	0.01		$	(0.06	)	$	0.01
Diluted net (loss) income per share	$	(0.06	)	$	0.01		$	(0.06	)	$	0.01
Weighted common shares outstanding:
Basic		10,290			8,245			10,268			8,245
Diluted		10,290			8,789			10,268			8,793

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

BIOANALYTICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except number of shares)

	Six Month Period Ended March 31, 2019
									Additional					Total
	Preferred Shares				Common Shares				paid-in		Accumulated			shareholders'
	Number		Amount		Number		Amount		capital		deficit			equity
Balance at September 30, 2018		35	$	35		10,245,277	$	2,523	$	24,557	$	(16,231	)	$	10,884
Adoption of accounting standard												(76	)		(76	)
Comprehensive loss:
Net loss												(85	)		(85	)
Stock based compensation										25					25
															-
Balance at December 31, 2018		35		35		10,245,277		2,523		24,582		(16,392	)		10,748
Adoption of accounting standard
Comprehensive loss:
Net loss												(569	)		(569	)
Stock based compensation						44,615		11		99					110
Stock option exercises						639		-		1					1
Balance at March 31, 2019		35		35		10,290,531		2,534		24,682		(16,961	)		10,290

	Six Month Period Ended March 31, 2018
									Additional					Total
	Preferred Shares				Common Shares				paid-in		Accumulated			shareholders'
	Number		Amount		Number		Amount		Compensation		deficit			equity
Balance at September 30, 2017		1,035	$	1,035		8,243,896	$	2,023	$	21,446	$	(16,037	)	$	8,467
															-
Comprehensive loss:															-
Net income												26			26
Stock based compensation										34					34
Stock option exercises						305				1					1
Balance at December 31, 2017		1,035		1,035		8,244,201		2,023		21,481		(16,011	)		8,528
Comprehensive loss:
Net income												55			55
Stock based compensation										34					34
Stock option exercises						1,000		-		1					1
Balance at March 31, 2018		1,035		1,035		8,245,201		2,023		21,516		(15,956	)		8,618

The accompanying notes are an integral part of the consolidated financial statements.

5

BIOANALYTICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended March 31,
	2019			2018
Operating activities:
Net (loss) income	$	(654	)	$	81
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		1,324			782
Stock based compensation		124			68
Provision for doubtful accounts		(20	)		(4	)
Gain on disposal of property and equipment		(3	)		(1	)
Unrealized foreign currency gains		(136	)		-
Changes in operating assets and liabilities:
Accounts receivable		286			(3	)
Inventories		79			(87	)
Income tax accruals		29			(61	)
Prepaid expenses and other assets		(227	)		73
Accounts payable		(145	)		(214	)
Accrued expenses		(329	)		81
Customer advances		583			127
Net cash provided by operating activities		911			842
Investing activities:
Capital expenditures		(2,218	)		(433	)
Proceeds from sale of equipment		-			2
Net cash used by investing activities		(2,218	)		(431	)
Financing activities:
Payments of long-term debt		(451	)		(111	)
Payments of debt issuance costs		(22	)		-
Payments on revolving line of credit		(11,505	)		(5,085	)
Borrowings on revolving line of credit		11,914			5,085
Borrowing on construction loan		908			-
Borrowing on equipment loan		285			-
Proceeds from exercise of stock options		1			1
Payments on capital lease obligations		(76	)		(63	)
Net cash provided (used in) by financing activities		1,054			(173	)
Net increase (decrease) in cash and cash equivalents		(253	)		238
Cash and cash equivalents at beginning of period		773			434
Cash and cash equivalents at end of period	$	520		$	672
Supplemental disclosure of non-cash financing activities:
Cash paid for interest	$	225		$	94

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share data or as otherwise indicated)

(Unaudited)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Bioanalytical Systems, Inc. and its subsidiaries (“We,” “Our,” “Us,” the “Company” or “BASi”) engage in contract laboratory research services and other services related to pharmaceutical development. We also manufacture scientific instruments for life sciences research, which we sell with related software for use by pharmaceutical companies, universities, government research centers and medical research institutions. Our customers are located throughout the world.

We have prepared the accompanying unaudited interim condensed consolidated 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, included in the Company’s annual report on Form 10-K for the year ended September 30, 2018. Certain amounts in the fiscal 2018 consolidated financial statements have been reclassified to conform to the fiscal 2019 presentation without affecting previously reported net income or stockholders’ equity. In the opinion of management, the condensed consolidated financial statements for the three and six months ended March 31, 2019 and 2018 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, 2019. The results of operations for the three and six months ended March 31, 2019 may not be indicative of the results for the year ending September 30, 2019.

2. STOCK-BASED COMPENSATION

The Company’s 2008 Stock Option Plan (“the Plan”) was used to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees and aligning their interests with those of our shareholders. The Plan is described more fully in Note 9 in the Notes to the Consolidated Financial Statements in our Form 10-K for the fiscal year ended September 30, 2018. In March 2018, our shareholders approved the amendment and restatement of the Plan in the form of the Amended and Restated 2018 Equity Incentive Plan (the “Equity Plan”) and the Company currently grants equity awards from the Equity Plan. The purpose of the Equity Plan is to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees. The maximum number of common shares that may be granted under the Equity Plan is 700 shares.

All options granted under the Plan and the Equity Plan had an exercise price equal to the fair market value of the underlying common shares on the date of grant. We expense the estimated fair value of stock options over the vesting periods of the grants. We recognize expense for awards subject to graded vesting using the straight-line attribution method, reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment is recognized at that time. Stock based compensation expense for the three and six months ended March 31, 2019 was $99 and $124, respectively. Stock based compensation expense for the three and six months ended March 31, 2018 was $34 and $68, respectively. The additional expense in the three months ending March 31, 2019 was due to the grants issued to our new Chief Executive Officer in January 2019 and option grants to all employees that were employed as of February 6, 2019.

A summary of our stock option activity for the six months ended March 31, 2019 is as follows (in thousands except for share prices):

	Options (shares)			Weighted- Average Exercise Price		Weighted- Average Grant Date Fair Value
Outstanding – September 30, 2018		301		$	1.73	$	1.38
Exercised		(1	)	$	1.40	$	1.15
Granted		403		$	1.41	$	1.04
Forfeited		(4	)	$	1.74	$	1.38
Outstanding - March 31, 2019		699		$	1.55	$	1.18

7

The weighted-average assumptions used to compute the fair value of the options granted in the six months ended March 31, 2019 were as follows:

Risk-free interest rate	2.58	%
Dividend yield	0.00	%
Volatility of the expected market price of the Company's common shares	72.0%-72.5	%
Expected life of the options (years)	8.0

As of March 31, 2019, our total unrecognized compensation cost related to non-vested stock options was $500 and is expected to be recognized over a weighted-average service period of 1.6 years.

A summary of our restricted share activity for the six months ended March 31, 2019 is as follows:

	Restricted Shares
Outstanding – September 30, 2018		-
Granted		45
Vested		(35	)
Forfeited		-
Outstanding - March 31, 2019		10

As of March 31, 2019, our total unrecognized compensation cost related to non-vested restricted stock was $12 and is expected to be recognized over a weighted-average service period of 1.79 years. The total fair value of the shares vested during the three and six months ended March 31, 2019 was $44.

3. INCOME (LOSS) PER SHARE

We compute basic income (loss) per share using the weighted average number of common shares outstanding. The Company has two categories of dilutive potential common shares: Series A preferred shares issued in May 2011 in connection with our registered direct offering and shares issuable upon exercise of options. We compute diluted earnings per share using the if-converted method for preferred stock and the treasury stock method for stock options, respectively. Shares issuable upon exercise of 699 options and 17 common shares issuable upon conversion of preferred shares were not considered in computing diluted income (loss) per share for the three and six months ended March 31, 2019 because they were anti-dilutive.

The following table reconciles our computation of basic income per share to diluted income per share:

	Three Months Ended March 31,					Six Months Ended March 31,
	2019			2018		2019			2018
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$	(569	)	$	55	$	(654	)	$	81
Weighted average common shares outstanding		10,290			8,245		10,268			8,245
Basic net income (loss) per share	$	(0.06	)	$	0.01	$	(0.06	)	$	0.01
Diluted net income per share:
Diluted net income (loss) applicable to common shareholders	$	(569	)	$	55	$	(654	)	$	81
Weighted average common shares outstanding		10,290			8,245		10,268			8,245
Plus: Incremental shares from assumed conversions:
Series A preferred shares		-			518		-			518
Dilutive stock options/shares		-			26		-			30
Diluted weighted average common shares outstanding		10,290			8,789		10,268			8,793
Diluted net income (loss) per share	$	(0.06	)	$	0.01	$	(0.06	)	$	0.01

8

4. INVENTORIES

Inventories consisted of the following:

	March 31, 2019			September 30, 2018
Raw materials	$	841		$	939
Work in progress		191			89
Finished goods		264			342
	$	1,296		$	1,370
Obsolescence reserve		(193	)		(188	)
	$	1,103		$	1,182

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 2 to the Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended September 30, 2018.

	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Revenue:
Service	$	8,131		$	5,030		$	15,866		$	9,555
Product		1,213			914			2,103			1,766
	$	9,344		$	5,944		$	17,969		$	11,321
Operating Income (Loss)
Service	$	877		$	918		$	1,513		$	1,699
Product		30			52			(50	))		84
Corporate		(1,355	)		(861	)		(1,870	)		(1,662	)
	$	(449	)	$	110		$	(408	)	$	121
Interest expense		(122	)		(48	)		(248	)		(100	)
Other income		3			4			4			4
Income (loss) before income taxes	$	(568	)	$	66		$	(652	)	$	25

6. INCOME TAXES

We use the asset and liability method of accounting for income taxes. We recognized deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. We record valuation allowance based on a determination of the expected realization of tax assets.

9

We recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. We measure the amount of the accrual for which an exposure exists as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon settlement of the position.

At March 31, 2019 and September 30, 2018, we had no liability for uncertain income tax positions.

We record interest and penalties accrued in relation to uncertain income tax positions as a component of income tax expense. Any changes in the liability for uncertain tax positions would impact our effective tax rate. We do not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months.

We file income tax returns in the U.S. and several U.S. states. We remain subject to examination by taxing authorities in the jurisdictions in which we have filed returns for years after 2013.

7. DEBT

Credit Facility

On June 23, 2017, we entered into a Credit Agreement with First Internet Bank of Indiana (“FIB”), which Credit Agreement as of March 31, 2019 had been amended on July 2, 2018, September 6, 2018 and September 28, 2018 (as amended, the “Credit Agreement”). The Credit Agreement included two term loans (the “Initial Term Loan” and “Subsequent Term Loan,” respectively), a revolving line of credit (the “Revolving Facility”), a construction draw loan (the “Construction Draw Loan”) and an equipment draw loan (the “Equipment Draw Loan”).

The Initial Term Loan for $4,500 bears interest at a fixed rate of 3.99%, with monthly principal and interest payments of approximately $33. The Initial Term Loan matures in June 2022. The balance on the Initial Term Loan at March 31, 2019 was $4,106. We used the proceeds from the Initial Term Loan to satisfy our indebtedness with Huntington Bank and terminated the related interest rate swap.

The July 2, 2018 amendment to the Credit Facility provided the Company with the Subsequent Term Loan in the amount of $5,500, the proceeds of which were used to fund a portion of the cash consideration for the acquisition of Seventh Wave Laboratories LLC. Amounts outstanding under the Subsequent Term Loan bear interest at a fixed per annum rate of 5.06%, with monthly principal and interest payments equal to $78. The Subsequent Term Loan matures July 2, 2023 and the balance on the Subsequent Term Loan at March 31, 2019 was $5,057.

The Revolving Facility provides a line of credit for up to $3,500 which the Company may borrow from time to time, subject to the terms of the Credit Agreement, including as may be limited by the amount of the Company’s outstanding eligible receivables. As of March 31, 2019, the Revolving Credit Facility was to have matured in June 2019 and bears interest at the Prime Rate (generally defined as the highest rate identified as the “Prime Rate” in The Wall Street Journal “Money Rates” column on the date the interest rate is to be determined, or if that date is not a publication date, on the publication date immediately preceding) less Twenty-five (25) Basis Points (0.25%). The balance on the Revolving Facility was $409 and $0 as of March 31, 2019 and September 30, 2018, respectively. We must pay accrued and unpaid interest on the outstanding balance under the Revolving Facility on a monthly basis.

The September 28, 2018 amendment provided the Company with the Construction Draw Loan in a principal amount not to exceed $4,445 and the Equipment Draw Loan in a principal amount not to exceed $1,429. The Construction Draw Loan and Equipment Draw Loan each mature on March 28, 2025. As of March 31, 2019, there was a $1,193 aggregate balance on these loans.

Subject to certain conditions precedent, a Construction Draw Loan and an Equipment Draw Loan each permit the Company to obtain advances aggregating up to the maximum principal amount available for such loan through March 28, 2020. Amounts outstanding under these loans bear interest at a fixed per annum rate of 5.20%. The Construction Draw Loan and the Equipment Draw Loan each require monthly payments of accrued interest on amounts outstanding through March 28, 2020, and thereafter monthly payments of principal and interest on amounts then outstanding through maturity.

10

Long term debt is detailed in the table below.

	As of:
	March 31, 2019			September 30, 2018
Initial term loan	$	4,106		$	4,222
Subsequent term loan		5,057			5,392
Construction loans		1,193			-
		10,356			9,614
Less: Current portion		(930	)		(909	)
Less: Debt issue costs not amortized		(161	)		(159	)
Total Long-term debt	$	9,265		$	8,546

The Credit Agreement contains various restrictive covenants, including restrictions on the Company's ability to dispose of assets, make acquisitions or investments, incur debt or liens, make distributions to shareholders or repurchase outstanding stock, enter into related party transactions and make capital expenditures, other than upon satisfaction of the conditions set forth in the Credit Agreement. As of March 31, 2019, the Credit Agreement also required us to maintain (i) a minimum debt service coverage ratio of not less than 1.25 to 1.0 and (ii) a cash flow coverage ratio whereby, the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended on such date may not exceed 4.50 to 1.00. Upon an event of default, which includes certain customary events such as, among other things, a failure to make required payments when due, a failure to comply with covenants, certain bankruptcy and insolvency events, and defaults under other material indebtedness, FIB may cease advancing funds, increase the interest rate on outstanding balances, accelerate amounts outstanding, terminate the agreement and foreclose on all collateral.

As of March 31, 2019, the Company’s obligations under the Credit Agreement were guaranteed by BAS Evansville, Inc. (“BASEV”) as well as Seventh Wave Laboratories, LLC (“SWL”), each a wholly owned subsidiary of the Company. The Company’s obligations under the Credit Agreement and BASEV’s and SWL’s obligations under their respective Guaranties are secured by first priority security interests in substantially all of the assets of the Company, BASEV, and SWL, respectively, as well as mortgages on the Company’s and BASEV’s facilities in West Lafayette, Indiana and Evansville, Indiana, respectively and pledges of the Company’s ownership interests in its subsidiaries.

On May 1, 2019, the Company entered into certain amendments to its credit arrangements with FIB. Refer to Note 12 to the Condensed Consolidated Financial Statements.

8. ACCRUED EXPENSES

As part of a fiscal 2012 restructuring, we accrued for lease payments at the cease use date for our United Kingdom facility and have considered free rent, sublease rentals and the number of days it would take to restore the space to its original condition prior to our improvements. Based on these matters, we had a $1,117 reserve for lease related costs and for legal and professional fees and other costs to remove improvements previously made to the facility. During the first six months of fiscal 2019, the Company released portions of the reserve for lease related liabilities that were no longer owed due to the statute of limitations. For the three and six months ended March 31, 2019, general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income were reduced by $55 and $546, respectively for the liability reduction. At March 31, 2019 and September 30, 2018, respectively, we had $503 and $1,117 reserved for the remaining liability. The reserve is classified as a current liability on the Condensed Consolidated Balance Sheets.

11

9. BUSINESS COMBINATIONS

Overview

On July 2, 2018, the Company, through its wholly-owned subsidiary Seventh Wave Laboratories, LLC (f/k/a Cardinal Laboratories LLC) (the “Seventh Wave Purchaser”), acquired (the “Seventh Wave Acquisition”) substantially all of the assets of SW Chrysalis, LLC (f/k/a Seventh Wave Laboratories LLC) (the “Seventh Wave Seller”), a consulting-based contract research laboratory located in Maryland Heights, Missouri providing integrated services for discovery and preclinical drug development, under the terms and conditions of an Asset Purchase Agreement, dated July 2, 2018, among the Seventh Wave Purchaser, the Company, the Seventh Wave Seller and certain members of the Seventh Wave Seller. The total consideration for the Seventh Wave Acquisition was approximately $9,234, which consisted of $6,759 in cash, including an indemnity escrow of $750, and 1,500,000 of the Company’s common shares valued at $2,475, using the closing price of the Company’s common shares on June 29, 2018. The Seventh Wave Purchaser is operated as a wholly-owned subsidiary of the Company. The Company funded the cash portion of the purchase price for the Seventh Wave Acquisition with cash on hand and the net proceeds from the refinancing of its credit arrangements with FIB, as described in Note 7.

Pro Forma Results

The Company’s unaudited pro forma results of operations for the three and six months ended March 31, 2018 assuming the Seventh Wave Acquisition had occurred as of October 1, 2017 are presented for comparative purposes below. These amounts are based on available information of the results of operations of the Seventh Wave Seller’s operations prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the Seventh Wave Acquisition been completed on October 1, 2017.

The unaudited pro forma information is as follows:

	Three Months Ended			Six Months Ended
	March 31, 2018			March 31, 2018
Total revenues	$	8,946		$	18,065
Net income		(174	)		75
Pro forma basic net income (loss) per share	$	(0.02	)	$	0.01
Pro forma diluted net income (loss) per share	$	(0.02	)	$	0.01

10. NEW ACCOUNTING PRONOUNCEMENTS

On October 1, 2018, the Company adopted Accounting Standard Codification, or ASC Topic 606, “Revenue from Contracts with Customers,” (Topic 606), using the modified retrospective method for all contracts that were not completed as of October 1, 2018. Comparative prior period information continues to be reported under the accounting standards in effect for the period presented. Topic 606 superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance requires the Company to apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation.

The cumulative effect of initially applying the new revenue standard was $(76) and has been recorded as an adjustment to the opening balance of retained earnings. The cumulative adjustment relates primarily to the recognition of revenue for free archive storage offered to customers. Gross sales and deferred revenue of $(76), respectively, were recorded as part of the cumulative effect adjustment. The comparative information has not been restated and it is reported in accordance with accounting standard Topic 605, which was in effect for those periods.

On October 1, 2018 the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230), which addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017. The adoption of this guidance had no material impact on our consolidated financial statements.

12

In February 2016, the FASB issued updated guidance on leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. The amendments are to be applied prospectively to business combinations that occur after the effective date. The Company is progressing with its preparation for the adoption and implementation of this new accounting standard and related changes in internal controls and will adopt the standard in the first quarter of fiscal 2020.

11. REVENUE RECOGNITION

In accordance with ASC 606, the Company disaggregates its revenue from customers into two revenue streams, service revenue and product revenue. At contract inception the Company assesses the services promised in the contract with the customers to identify performance obligations in the arrangements.

Service revenue

The Company enters into contracts with customers to provide drug discovery and development services with payments based on mainly fixed-fee arrangements. The Company also offers free archive storage services on certain contracts. Customers can also enter into separate archive storage contracts after the expiration of the free storage period.

The Company’s drug discovery and development services contracts that include a free storage period are considered a single performance obligation because the company provides a highly integrated service. The inclusion of free storage fee in the measurement of progress under the discovery and development service contracts creates a timing difference between the amounts the company is entitled to receive in reimbursement of cost incurred and amount of revenue recognized on such costs, which is recognized as deferred revenue and classified as customer advances on the condensed consolidated balance sheet.

The Company’s fixed fee arrangements may involve bioanalytical and pharmaceutical method development and validation, nonclinical research services and the analysis of bioanalytical and pharmaceutical samples. For bioanalytical and pharmaceutical method validation services and nonclinical research services, revenue is recognized over time using the input method based on the ratio of direct costs incurred to total estimated direct costs. For contracts that involve method development or the analysis of bioanalytical and pharmaceutical samples, revenue is recognized over time when samples are analyzed or when services are performed. The Company generally bills for services on a milestone basis. These contracts represent a single performance obligation and due to the Company’s right to payment for work performed, revenue is recognized over time. Research services contract fees received upon acceptance are deferred until earned, and classified within customer advances on the condensed consolidated balance sheet. Unbilled revenues represent revenues earned under contracts in advance of billings.

Archive services provide climate controlled archiving for client’s data and samples. The archive revenue is recognized over time, generally when the service is provided. These arrangements typically include only one performance obligation. Amounts related to future archiving or prepaid archiving contracts for customers where archiving fees are billed in advance are accounted for as deferred revenue and recognized ratably over the period the applicable archive service is performed.

Product revenue

The Company’s products can be sold to multiple customers and have alternative use. Both the transaction sales price and shipping terms are agreed upon in the customer order. For these products, all revenue is recognized at a point in time, generally when title of the product and risk of loss is transferred to the customer based upon shipping terms. These arrangements typically include only one performance obligation. Certain products have maintenance agreements available for customers to purchase. These are typically billed in advance and are accounted for as deferred revenue and recognized ratably over the applicable maintenance period.

The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the three months ended March 31, 2019 is as follows:

13

Statements of Operations and Comprehensive (Loss) Income

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Service revenue	$	8,131		$	(25	)	$	8,156
Product revenue		1,213						1,213
Total revenue		9,344			(25	)		9,369
Total cost of revenue		6,783						6,783
Gross profit		2,561			(25	)		2,586
Operating loss		(449	)		(25	)		(424	)
Net loss before income taxes		(568	)		(25	)		(543	)
Income taxes expense		1						1
Net loss	$	(569	)	$	(25	)	$	(544	)
Diluted net loss per share	$	(0.06	)	$	(0.00	)	$	(0.06	)

Balance Sheet

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Current Liabilities:
Customer advances	$	5,583		$	(95	)	$	5,489
Shareholder’s equity:
Accumulated deficit	$	(16,961	)	$	95		$	(16,867	)

The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the six months ended March 31, 2019 is as follows:

Statements of Operations and Comprehensive (Loss) Income

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Service revenue	$	15,866		$	(19	)	$	15,885
Product revenue		2,103						2,103
Total revenue		17,969			(19	)		17,988
Total cost of revenue		12,989						12,989
Gross profit		4,980			(19	)		4,999
Operating loss		(408	)		(19	)		(389	)
Net loss before income taxes		(652	)		(19	)		(633	)
Income taxes expense		2						2
Net loss	$	(654	)	$	(19	)	$	(635	)
Diluted net loss per share	$	(0.06	)	$	(0.00	)	$	(0.06	)

14

Balance Sheet

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Current Liabilities:
Customer advances	$	5,583		$	(95	)	$	5,489
Shareholder’s equity:
Accumulated deficit	$	(16,961	)	$	95		$	(16,867	)

12. SUBSEQUENT EVENTS

Acquisition

On May 1, 2019, the Company, through its wholly-owned subsidiary Oriole Toxicology Services LLC (the “ Smithers Avanza Purchaser”), acquired (the “Smithers Avanza Acquisition”) from Smithers Avanza Toxicology Services LLC (the “Smithers Avanza Seller”), a consulting-based contract research laboratory located in Gaithersburg, Maryland, substantially all of the assets used by the Smithers Avanza Seller in connection with the performance of in-vivo mammalian toxicology CRO services for pharmaceuticals (small molecules and biologics), vaccines, agro and industrial chemicals, under the terms and conditions of an Asset Purchase Agreement, dated May 1, 2019, among the Smithers Avanza Purchaser, the Company, the Smithers Avanza Seller and the member of the Smithers Avanza Seller (the “Smithers Avanza Purchase Agreement”). The consideration for the Acquisition consisted of $1,271 in cash, subject to certain adjustments and an indemnity escrow of $125, 200 of the Company’s common shares and an unsecured promissory note in the initial principal amount of $810 made by the Smithers Avanza Purchaser and guaranteed by the Company. The Company funded the cash portion of the purchase price for the Acquisition with cash on hand and the net proceeds from the refinancing of its credit arrangements with FIB, as described below.

The Smithers Avanza Purchase Agreement contains customary representations, warranties, covenants (including non-competition requirements applicable to the selling parties for a 5-year period) and indemnification provisions. As contemplated by the Smithers Avanza Purchase Agreement, on May 1, 2019 the Smithers Avanza Purchaser assumed amended lease arrangements for certain premises in Gaithersburg, Maryland (the “Lease Arrangements”). Under the Lease Arrangements, the Smithers Avanza Purchaser agreed to lease the premises for a term of 5 years and 8 months, with two 5 year extensions at the Smithers Avanza Purchaser’s option. Annual minimum rental payments under the initial term of the Lease Arrangements range from $400 to $800, provided that the Lease Arrangements provide the Smithers Avanza Purchaser with the option to purchase the premises. The Lease Arrangements include customary rights upon a default by landlord or tenant.

Amendment to Credit Arrangements

In connection with the Second Acquisition, on May 1, 2019 the Company and FIB entered into a fourth amendment (the “Fourth Amendment”) to the Credit Agreement by and between the parties dated June 23, 2017, as previously amended July 2, 2018, September 6, 2018 and September 28, 2018 (as amended, the “Credit Agreement”) to (i) extend the term of the Company’s $3,500 revolving credit facility to June 30, 2020, (ii) provide the Company with an additional term loan (the “New Term Loan”) in the amount of $1,271, the proceeds of which were used to fund the cash consideration for the Acquisition, and (iii) provide for an additional line of credit in the principal amount of $1,100 (the “Capex Line”), which the Company may borrow from time to time, subject to the terms of the Credit Agreement. The New Term Loan and the Capex Line mature November 1, 2025 and June 30, 2020, respectively.

15

Amounts outstanding under the New Term Loan bear interest at a fixed per annum rate of 4.63%, while interest accrues on the principal balance of the Capex Line at a floating per annum rate equal to the sum of the Prime Rate plus Fifty Basis Points (0.5%), which rate shall change concurrently with the Prime Rate. Commencing June 1, 2019, the New Term Loan requires monthly interest only payments until December 1, 2019, from which time payments of principal and interest in monthly installments of $20 become due, with all accrued but unpaid interest, cost and expenses due and payable at the maturity date. The Company is required to pay accrued but unpaid interest on the Capex Line on a monthly basis commencing on June 1, 2019, until June 30, 2020, at which time the entire balance of the Capex Line, together with accrued but unpaid interest, costs and expenses, shall be due and payable in full.

Following its amendment, the Company’s obligations under the Credit Agreement are guaranteed by BAS Evansville, Inc. (“BASEV”), Seventh Wave Laboratories, LLC (“Seventh Wave”), as well as the Smithers Avanza Purchaser, each a wholly owned subsidiary of the Company. The Company’s obligations under the Credit Agreement and BASEV’s, Seventh Wave’s and the Smithers Avanza Purchaser’s obligations under their respective Guaranties are secured by first priority security interests in substantially all of the assets of the Company, BASEV, Seventh Wave and the Smithers Avanza Purchaser respectively, as well as mortgages on the Company’s and BASEV’s facilities in West Lafayette, Indiana and Evansville, Indiana, respectively, and pledges of the Company’s ownership interests in its subsidiaries.

The various restrictive covenants under the Credit Agreement remain consistent, provided that the parties agreed (i) to modify the computation of the minimum debt service coverage ratio and lower the ratio itself during certain periods to 1.15 to 1.0 or 1.20 to 1.0 to appropriately reflect relevant aspects of the Smithers Avanza Acquisition and (ii) to suspend application of the cash flow coverage ratio through the fiscal quarter ending December 31, 2019, with the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended as of March 31, 2020 and June 30, 2020 not to exceed 5.00 to 1.00 and 4.50 to 1.00, respectively. The Company also agreed to obtain a life insurance policy in an amount not less than $2,000 for its President and Chief Executive Officer and to provide FIB an assignment of such life insurance policy as collateral.

16

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

This report contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this Report and may include, but are not limited to, statements regarding our intent, belief or current expectations with respect to (i) our strategic plans; (ii) trends in the demand for our products and services; (iii) trends in the industries that consume our products and services; (iv) our ability to develop new products and services; (v) our ability to make capital expenditures and finance operations; (vi) global economic conditions, especially as they impact our markets; (vii) our cash position; (viii) our ability to successfully integrate the operations and personnel of Seventh Wave and Smithers Avanza Toxicology Services; (ix) our ability to effectively manage current and any future expansion or acquisition initiatives undertaken by the Company; (x) our ability to service our outstanding indebtedness and (x) our expectations regarding the volume of new bookings, pricing, gross profit margins and liquidity. Readers are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors, many of which are beyond our control.

In addition, we have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the assumptions on which the forward-looking statements contained herein are based are reasonable, actual events may differ from those assumptions, and as a result, the forward-looking statements based upon those assumptions may not accurately project future events. The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included or incorporated by reference elsewhere in this Report. In addition to the historical information contained herein, the discussions in this Report may contain forward-looking statements that may be affected by risks and uncertainties, including those discussed in Item 1A, Risk Factors contained in our annual report on Form 10-K for the fiscal year ended September 30, 2018. Our actual results could differ materially from those discussed in the forward-looking statements.

Amounts in this Item 2 are in thousands, unless otherwise indicated.

Recent Developments and Executive Summary

Recently we have undertaken significant internal and external growth initiatives. We acquired the business of Seventh Wave Laboratories, LLC, in July 2018, commenced the expansion of our facilities in Evansville, Indiana, in Ocotber 2018, which should be completed by November 2019, acquired the toxicolgy business of Smithers Avanza on May 1 of 2019, and obtained funding to support these initiatives and other improvements to our facilites and equipment in order to support future growth and enhance our scientific capabilities, client service offerings and client experiences. In addition to the aqusitions and facility expansions and improvements, during the quarter ended March, 31 2019, we recruited and filled open positions for Chief Executive Officer, Chief Operations Officer, Chief Commercial Officer and a critical scientific leadership role of Senior Vice President for DMPK. We believe these leaders, combined with our existing management team and expansion initiatives, development of our sales and marketing team and the hiring of new employees to develop our scientific team, have lead and will continue to lead to signifcant growth in revenue and the ablity to improve the service offerings to our clients. We recoginize the recent investments in growth, developing a leadership team, new employees, scientific strength and added services are critical to meeting the future expecations of our clients, employees and shareholders. We believe, the actions and investments over the last year have allowed the Company to form a foundation we can build upon. Our financial results have been in line with management's expectations for fiscal 2019. Our new orders remain strong and we believe we are on track with our goals and plans for this year and fiscal 2020.

The acquisition of Seventh Wave Laboratories LLC, a consulting-based contract research laboratory located in Maryland Heights, Missouri providing integrated services for discovery and preclinical drug development, was completed under the terms and conditions of an Asset Purchase Agreement, dated July 2, 2018 (the “Seventh Wave Acquisition”). In connection with the Seventh Wave Acquisition, on July 2, 2018 the Company and First Internet Bank entered into an amendment to the Company's credit arrangements. Refer to the Liquidity and Capital Resources Section herein for additional information. We have been capitalizing on the collective skill sets, expertise and assets acquired via the Acquisition to expand our service offerings and reach additional clients.

On September 28, 2018, we entered into a further amendment to our credit arrangements which provided lines of credit for borrowings of up to $4,445 for construction financing and $1,429 for future equipment acquisitions. In October 2018, we signed a contract to begin construction of approximately 12,000 feet of expanded laboratory space at our Evansville facility. The space is projected to be completed by November of 2019.

17

On May 1, 2019, we acquired certain toxicology related assets of Smithers Avanza Toxicology Services LLC, a consulting-based contract research laboratory located in Gaithersburg, Maryland providing in-vivo mammalian toxicology CRO services for pharmaceuticals (small molecules and biologics), vaccines, agro and industrial chemicals, under the terms of an Asset Purchase Agreement, dated May 1, 2019 (“Smithers Avanza Acquisition”). In connection with the Smithers Avanza Acquisition, on May 1, 2019, the Company and First Internet Bank entered into an amendment to the Company's credit arrangements. Refer to Note 12 to the Condensed Consolidated Financial Statements for additional information. We anticipate taking advantage of immediate capacity and expect to further capitalize on the assets and broadened scientific expertise acquired via the Smithers Avanza Acquisition to reach additional clients.

We are working on the integration of the combined businesses resulting from the Seventh Wave Acquisition and the Smithers Avanza Acquisition. We plan to further develop our sales, marketing, client services and branding. We will continue to evaluate additional internal and external growth opportunities and new services to provide to existing clients. We will also continue to develop existng services into "Centers of Excellance" to distinguish our services in the industry.

Business Overview

Bioanalytical Systems, Inc. and its subsidiaries (“We,” “Our,” “us,” the “Company,” or “BASi”) is a contract research organization ("CRO") that provides drug discovery and development services to the pharmaceutical industry, and sells analytical instruments to the pharmaceutical development and contract research industries. Our mission is to provide drug developers with superior scientific research and innovative analytical instrumentation in order to bring revolutionary new drugs to market quickly and safely. Our strategy is to provide services that will generate high-quality and timely data in support of new drug approval or use expansion. Our clients and partners include pharmaceutical, biotechnology, academic and government organizations. We provide innovative technologies and products and a commitment to quality to help clients and partners accelerate the development of safe and effective therapeutics and maximize the returns on their research and development investments. We offer an efficient, variable-cost alternative to our clients’ internal product development programs. Outsourcing development work to reduce overhead and speed drug approvals through the Food and Drug Administration ("FDA") is an established alternative to in-house development among pharmaceutical companies. We derive our revenues from sales of our research services and drug development instruments, both of which are focused on evaluating drug safety and efficacy.

We support both the non-clinical and clinical development needs of researchers and clinicians for small molecule drug candidates. Our scientists have the skills in analytical instrumentation development, chemistry, computer software development, histology, pathology, physiology, medicine, analytical chemistry and toxicology to make the services and products we provide increasingly valuable to our current and potential clients. Our principal clients are scientists engaged in analytical chemistry, drug safety evaluation, clinical trials, drug metabolism studies, pharmacokinetics and basic research from small start-up biotechnology companies to many of the largest global pharmaceutical companies. We are committed to bringing scientific expertise, quality and speed to every drug discovery and development program to help our clients develop safe and effective life-changing medicines.

Our business is largely dependent on the level of pharmaceutical and biotechnology companies' efforts in new drug discovery and approval. Our contract research services segment is a direct beneficiary of these efforts, through outsourcing by these companies of research work. Our products segment is an indirect beneficiary of these efforts, as increased drug development leads to capital expansion, providing opportunities to sell the equipment we produce and the consumable supplies that support our products.

Developments within the industries we serve have a direct, and sometimes material, impact on our operations. Currently, many large pharmaceutical companies have major "blockbuster" drugs that are nearing the end of their patent protections. This puts significant pressure on these companies both to develop new drugs with large market opportunity, and to re-evaluate their cost structures and the time-to-market of their products. Contract research organizations have benefited from these developments, as the pharmaceutical industry has turned to out-sourcing to both reduce fixed costs and to increase the speed of research and data development necessary for new drug applications. The number of significant drugs that have reached or are nearing the end of their patent protection has also benefited the generic drug industry. Generic drug companies provide a significant source of new business for CROs as they develop, test and manufacture their generic compounds.

18

We also believe that the development of innovative new drugs is evolving, evidenced by the significant reduction of expenditures on research and development at several major international pharmaceutical companies, accompanied by increases in outsourcing and investments in smaller start-up companies that are performing the early development work on new compounds. Many of these smaller companies are funded by either venture capital or pharmaceutical investment, or both, and generally do not build internal staffs that possess the extensive scientific and regulatory skills required to perform the various activities necessary to progress a drug candidate to the filing of an Investigative New Drug application with the FDA.

A significant portion of innovation in the pharmaceutical industry is now being driven by biotech and small, venture capital funded drug development companies. Many of these companies are "single-molecule" entities, whose success depends on one innovative compound. While several biotech companies have reached the status of major pharmaceutical companies, the industry is still characterized by smaller entities. These developmental companies generally do not have the resources to perform much of the research within their organizations, and are therefore dependent on the CRO industry for both their research and for guidance in preparing their regulatory submissions. These companies have provided significant new opportunities for the CRO industry, including BASI. We believe that the Company is ideally positioned to serve these customers as they look for alternatives to the large CROs that cater primarily to the large pharmaceutical company segment of the marketplace.

While continuing to maintain and develop our relationships with large pharmaceutical companies, we aggressively promote our services to developing businesses, which will require us to expand our existing capabilities to provide services early in the drug discovery and development phases, and to consult with customers on regulatory strategy and compliance leading to their FDA filings. Our Enhanced Drug Discovery services, part of this strategy, utilizes our proprietary Culex® technology to provide early experiments in our laboratories that previously would have been conducted in the sponsor’s facilities. As we move forward, we must balance the demands of the large pharmaceutical companies with the personal touch needed by smaller companies to develop a competitive advantage. We intend to accomplish this through the use of and expanding upon our existing project management skills, strategic partnerships and relationship management.

Research services are capital intensive. The investment in equipment, facilities and human capital to serve our markets is substantial and continuing. Rapid changes in automation, precision, speed and technologies necessitate a constant investment in equipment and software to meet market demands. We are also impacted by the heightened regulatory environment and the need to improve our business infrastructure to support our operations, which will necessitate additional capital investment. Our ability to generate capital to reinvest in our capabilities and to obtain additional capital if and as needed through financial transactions, is critical to our success. Sustained growth will require additional investment in future periods. Continued positive cash flow and access to capital will be important to our ability to make such investments.

In fiscal 2018, following improvements in many areas in fiscal 2017, we were able to see our new vision start to come to fruition as we addressed deferred maintenance issues, made strategic investments in new equipment, recruited critical leadership positions and scientists and obtained additional financing which allowed us to complete the Seventh Wave Acquisition. In fiscal 2018, we also increased our investment in research and development for specific products and restarted the discovery lab in West Lafayette. Our goals included increasing revenue on a consistent basis while investing and adding additional talent and complementary services. For fiscal 2019, in addition to closing the Smithers Avanza Acquisition and the expansion of our Evansville facility, we have concentrated efforts and investments on enhancing our business development program and marketing efforts, as well as ongoing Company-wide activities intended to enhance the client experience and streamline our communication, systems and operations.

We completed the Seventh Wave Acquisition in July 2018 and the Smithers Avanza Acquisition in May 2019, during the third quarter of fiscal 2019. We believe these acquisitions will allow us to capitalize on the collective skill sets, expertise and assets of the combined operations to expand our service offerings and reach more clients. We believe further that these acquisitions have provided the Company additional support for further corporate development, and additional sales talent to help drive profitable growth. With the acquisitions, we have more than doubled our active client base, enhanced client service offerings and have the ability to reduce expenses for services previously outsourced by all entities. In addition, the combined operations provide an opportunity to integrate support services and leverage relevant software.

Our long-term strategic objectives are to be a Company people want to be a part of, is respected by clients for its excellance in service, products and performance, and to maximize the Company’s intrinsic value per share. Our goals include increasing revenue on a consistent basis, while investing and adding additional talent and complementary services in order to deliver excellent data and results for our clients. During fiscal 2019, we have enhanced our management and leadership team. We intend to continue enhancing our business development program and marketing efforts, including by improving our message to clients, increasing our visibility in the marketplace and building our sales team. We also intend to complete ongoing Company-wide activities intended to enhance the client experience and streamline our communication, systems and operations. We have seen our sales and backlog grow as we continue to promote our vision.

19

During fiscal 2019, we have continued to invest in Products research and development in order to upgrade current products and to identify potential new products. We have also further developed and expanded our relationships with distributors and resellers to boost sales in our Products business. We continue to evaluate adding additional partnerships with companies similar to our current partners, Joanneum Research and PalmSens, to expand our Product offerings. Further, we have added key talent to help drive sales and development of our Products and to solidify relationships with our clients and prospective partners. We believe these measures will prepare us for growth in the long term.

We plan to continue to emphasize establishing a positive culture, which we believe has significantly reduced our employee turnover and will facilitate our continued recruitment and retention of talent.

We review various metrics to evaluate our financial performance, including revenue, margins and earnings. In the six months ended March 31, 2019, total revenues increased from $11,321 to $17,960 for a 58.7% increase. Gross profit increased from $3,321 to $4,980 for a 50.0% increase. Operating expenses were higher by 68.4% as compared to the same period in fiscal 2018. The most notable growth in operating expenses is related to our investment and focus in sales and marketing efforts to promote our brand as well as costs related to adding to the leadership team in anticipation of further expansion, acquisitions and growth. The latest acquisition was closed May 1, 2019. There was an operating loss of $408 for the six months ended March 31, 2019, compared to operating income of $121 for the same period in fiscal 2018.

As of March 31, 2019, we had $520 of cash and cash equivalents as compared to $773 of cash and cash equivalents at the end of fiscal 2018. In the first six months of fiscal 2019, we generated $911 in cash from operations as compared to $842 in the first six months of fiscal 2018. Total capital expenditures increased in the first six months of fiscal 2019 to $2,218 from $433 in the prior year period as we began the expansion at our Evansville facility and invested in laboratory and IT equipment at all sites.

As of March 31, 2019, we had a $409 balance on our $3,500 general line of credit, a $908 balance on our $4,445 construction line of credit and a $285 balance on our $1,429 equipment line of credit. As described herein, we incurred significant additional indebtedness in connection with financing the Seventh Wave Acquisition and the Smithers Avanza Acquisition and expect to incur additional indebtedness through borrowings under the construction and equipment lines of credit as we continue to undertake the Evansville, Indiana facilities expansion.

For a detailed discussion of our revenue, margins, earnings and other financial results for fiscal 2019, see “Results of Operations” below.

20

Results of Operations

The following table summarizes our condensed consolidated statement of operations as a percentage of total revenues for the periods shown:

	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Service revenue		87.0	%		84.6	%		88.3	%		84.4	%
Product revenue		13.0			15.4			11.7			15.6
Total revenue		100.0			100.0			100.0			100.0
Cost of Service revenue (a)		73.2			72.8			72.8			72.6
Cost of Product revenue (a)		68.6			59.3			68.5			60.3
Total cost of revenue		72.6			70.7			72.3			70.7
Gross profit		27.4			29.3			27.7			29.3
Total operating expenses		32.2			27.4			30.0			28.3
Operating income (loss)		(4.8	)		1.9			(2.3	)		1.0
Other income (expense)		(1.3	)		(0.7	)		(1.4	)		(0.8	)
Income (loss) before income taxes		(6.1	)		1.2			(3.6	)		0.2
Income tax (benefit) expense		0.0			0.2			0.0			(0.6	)
Net Income (Loss)		(6.1	)%		1.0	%		(3.6	)%		0.8	%

(a) Percentage of service and product revenues, respectively

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

Service and Product Revenues

Revenues for the quarter ended March 31, 2019 increased 57.2% to $9,344 compared to $5,944 for the same period last fiscal year.

Our Service revenue increased 61.7% to $8,131 in the second quarter of fiscal 2019 compared to $5,030 for the comparable prior-year period. Nonclinical services revenues increased $2,486 due primarily to the acquisition of Seventh Wave Laboratories, which accounted for $1,622 of the increase. Legacy BASi nonclinical revenue increased $864 due to an increase in demand for studies in the second quarter of fiscal 2019. Bioanalytical analysis revenues increased $638 due mainly to the additional revenue related to the acquisition of Seventh Wave Laboratories, which accounted for $584 of the increase and more samples analyzed during the second quarter of 2019 as compared to the comparable period last fiscal year. Other laboratory services revenues were negatively impacted by lower discovery services, partially offset by higher pharmaceutical analysis revenues in the second quarter of fiscal 2019 versus the comparable period in fiscal 2018. Archive revenue decreased by $82 reducing other laboratory services revenue in the second quarter of fiscal 2019, as compared to $130 revenue in the second quarter of fiscal 2018.

	Three Months Ended March 31,
	2019		2018		Change			%
Bioanalytical analysis	$	1,882	$	1,244	$	638			51.3	%
Nonclinical services		5,787		3,301		2,486			75.3	%
Other laboratory services		462		485		(23	)		(4.7	)%
	$	8,131	$	5,030	$	3,101

21

Sales in our Products segment increased 32.6% in the second quarter of fiscal 2019 to $1,213 from $914 in the same period of the prior fiscal year. The majority of the increase stems from an increase in sales of our Culex automated in vivo sampling systems due to large orders shipped in the second quarter of fiscal 2019 as a result of continued effort to increase product sales. Analytical instruments revenues also increased while other instrument revenue remained substantially consistent with results from the same period last fiscal year.

	Three Months Ended March 31,
	2019		2018		Change		%
Culex, in-vivo sampling systems	$	625	$	410	$	215		52.4	%
Analytical instruments		437		355		82		23.1	%
Other instruments		151		149		2		1.3	%
	$	1,213	$	914	$	299

Cost of Revenues

Cost of revenues for the second quarter of fiscal 2019 was $6,783 or 72.6% of revenue, compared to $4,204, or 70.7% of revenue for the comparable prior-year period.

Cost of Service revenue as a percentage of Service revenue increased to 73.2% during the second quarter of fiscal 2019 from 72.8% in the comparable period in fiscal 2018. The principal cause of this increase was the decline in archive revenues, which carry higher margins, as well as an increase in outsourced labor in the period.

Cost of Products revenue as a percentage of Products revenue in the second quarter of fiscal 2019 increased to 68.6% from 59.3% in the comparable prior-year period. This increase is mainly due to increased material cost and price reduction on certain items to make our products more competitive.

Operating Expenses

Selling expenses for the three months ended March 31, 2019 increased 116.1% to $655 from $303 for the comparable period in fiscal 2018. This increase is mainly due to higher salaries and benefits for the additional sales employees from the Seventh Wave Laboratories acquisition, plus higher outside services and exhibition related expenses in the second quarter of fiscal 2019 as compared to the prior-year period.

Research and development expenses for the second quarter of fiscal 2018 decreased 3.0% over the comparable period last fiscal year to $145 from $149.

General and administrative expenses for the second quarter of fiscal 2019 increased 87.8% to $2,210 from $1,178 for the comparable prior-year period. The principal reasons for the increase included administrative cost of the operations acquired via the Seventh Wave Acquisition, the hiring of our new CEO, higher corporate insurance expense, and increased stock-based compensation expense as a result of new grants to our CEO and option grants to all other employees who were employed as of February 6, 2019. The increase in expenses was partially offset by the release of a portion of the reserve for lease-related liabilities that were legally time barred.

Other Income (Expense)

Other expense for the second quarter of fiscal 2019 was $122, as compared to other expense of $48 for the second quarter of fiscal 2018. The primary reason for the change in expense was the increase in interest expense under our credit agreements with First Internet Bank.

22

Income Taxes

Our effective income tax rate for the three months ended March 31, 2019 and 2018 was (0.14)% and 16.94%, respectively.  The current year expense primarily relates to state income taxes.  The prior year benefit relates to an Alternative Minimum Tax (AMT) credit carryforward that will be refundable due to AMT being repealed for corporations.  This will be refundable for any tax year beginning after 2017 and before 2022 in an amount equal to 50% (100% for tax years beginning in 2021) of the excess minimum tax credit for the tax year, over the amount of the credit allowable for the year against regular tax liability.

Net Income (Loss)

As a result of the factors described above, net loss for the three months ended March 31, 2019 amounted to $569, compared to net income of $55 in the comparable fiscal 2018 period.

Six Months Ended March 31, 2019 Compared to Six Months Ended March 31, 2018

Service and Product Revenues

Revenues for the six months ended March 31, 2019 increased 58.7% to $17,969 as compared to $11,321 for the same period last fiscal year.

Our Service revenue increased 66.0% to $15,866 in the first six months of fiscal 2019 compared to $9,555 for the comparable prior-year period. Nonclinical services revenues increased due to an overall increase in the number of studies from the prior year and additional revenue attributable to the Seventh Wave Laboratories acquisition of $3,547 during the first half of fiscal 2019. Bioanalytical analysis revenues increased primarily due to the Seventh Wave Acquisition while legacy BASi bioanalytical analysis revenue remained steady when compared to the comparable prior-year period. Other laboratory services revenues were positively impacted by higher pharmaceutical analysis revenues in the first six months of fiscal 2019 versus the comparable period in fiscal 2018, while Archive revenue decreased by $61 in the first six months of fiscal 2019 compared to the comparable period in fiscal 2018.

	Six Months Ended March 31,
	2019		2018		Change		%
Bioanalytical analysis	$	3,576	$	2,276	$	1,314		58.1	%
Nonclinical services		11,315		6,352		4,963		78.1	%
Other laboratory services		975		927		34		3.6	%
	$	15,866	$	9,555	$	6,311

Sales in our Product segment increased 19.0% in the first six months of fiscal 2018 from $1,766 to $2,103 when compared to the same period in the prior fiscal year. The increase stems primarily from increased sales of our Culex automated in vivo sampling instruments and increased sales of our Analytical instruments in the first six months of fiscal 2019.

	Six Months Ended March 31,
	2019		2018		Change		%
Culex, in-vivo sampling systems	$	969	$	771	$	198		25.7	%
Analytical instruments		828		710		118		16.6	%
Other instruments		306		285		21		7.4	%
	$	2,103	$	1,766	$	337

23

Cost of Revenues

Cost of revenues for the first six months of fiscal 2019 was $12,987 or 72.3% of revenue, compared to $8,000, or 70.7% of revenue for the prior year period.

Cost of Service revenue as a percentage of Service revenue increased to 72.8% during the first six months of fiscal 2019 from 72.6% in the comparable period last year due to the mix of services provided in the current quarter.

Cost of Product revenue as a percentage of Product revenue in the first six months of fiscal 2019 increased to 68.5% from 60.3% in the comparable prior year period. This increase in the first six months of fiscal 2019 is mainly due to the increase in material cost and adjustment of selling price for in vivo products to stay competitive with the market.

Operating Expenses

Selling expenses for the six months ended March 31, 2019 increased 118.9% to $1,308 from $597 for the comparable fiscal 2018 period. This increase is mainly due to higher salaries and benefits for the additional sales employees from the Seventh Wave Laboratories acquisition, plus slightly higher travel expenses in the first six months of fiscal 2019 as compared to the same period in the prior year.

Research and development expenses for the first six months of fiscal 2019 decreased 6.6% over the comparable fiscal 2018 period to $269 from $288. The decrease was primarily due to lower consulting expenses slightly offset by increased salary expense as we sourced certain consulting services in-house.

General and administrative expenses for the first six months of fiscal 2019 increased 64.7% to $3,811 from $2,315 for the comparable fiscal 2018 period. The increase was mainly driven by the expenses associated with the Seventh Wave Laboratories operations plus higher salaries and benefits expense attributable to the hiring of our new Chief Executive Officer effective January 14, 2019, increased corporate insurance cost associated with the operations acquired via the Seventh Wave Acquisition, and higher stock-based compensation expense attributable to grants to our CEO and option grants to all employees who were employed as of February 6, 2019. The increase was partly offset by the release of a portion of the reserve for lease-related liabilities that were legally time barred.

Other Income (Expense)

Other expense for the first six months of fiscal 2019 increased to $244 from $96 for the same period of fiscal 2018. The primary reason for the change in expense was the increase in interest expense under our credit agreements with First Internet Bank, as we entered into a new loan as part of the Seventh Wave Acquisition in July 2018 and our construction and equipment loans added related debt and interest expense.

Income Taxes

Our effective income tax rate for the six months ended March 31, 2019 and 2018 was (0.25)% and (223.6)%, respectively. The current year expense primarily relates to state income taxes. The prior year benefit relates to an Alternative Minimum Tax (AMT) credit carryforward that will be refundable due to AMT being repealed for corporations. This will be refundable for any tax year beginning after 2017 and before 2022 in an amount equal to 50% (100% for tax years beginning in 2021) of the excess minimum tax credit for the tax year, over the amount of the credit allowable for the year against regular tax liability.

Net Income (Loss)

As a result of the factors described above, net loss for the six months ended March 31, 2019 amounted to $654, compared to net income of $81 in the comparable fiscal 2018 period.

24

Liquidity and Capital Resources

Comparative Cash Flow Analysis

At March 31, 2019, we had cash and cash equivalents of $520, compared to $773 at September 30, 2018.

Net cash provided by operating activities was $911 for the six months ended March 31, 2019 compared to cash provided by operating activities of $842 for the six months ended March 31, 2018. Contributing factors to our cash provided by operations in the first six months of fiscal 2019 were noncash charges of $1,324 for depreciation and amortization, employee stock compensation expense of $124, a net increase in customer advances of $583, a net decrease in accounts receivable of $286, and a net decrease in inventory of $79. These items were partially offset by, among other items, a net decrease in accounts payable of $145, decrease in accrued expenses of $329, increase in prepaid expense of $227, and unrealized foreign currency gain of $136.

Days’ sales in accounts receivable improved to 48 days at March 31, 2019 from 51 days at September 30, 2018 due to better collections and decrease in unbilled revenues. It is not unusual to see a fluctuation in the Company's pattern of days’ sales in accounts receivable. Customers may expedite or delay payments from period-to-period for a variety of reasons including, but not limited to, the timing of capital raised to fund on-going research and development projects.

Included in operating activities for the first six months of fiscal 2018 are non-cash charges of $782 for depreciation, employee stock compensation expense of $69, a net increase in customer advances of $127, net increase in accrued expenses of $81, as well as a net decrease in prepaid expenses of $72. These items were partly offset by a net increase in inventory of $87, decrease in income tax accruals of $61 and a decrease in accounts payable of $214.

Investing activities used $2,218 in the first six months of fiscal 2019 due mainly to capital expenditures as compared to a usage of $431 in the first six months of fiscal 2018. The investing activity in fiscal 2019 consisted of investments in laboratory equipment and the Evansville expansion as well as new monitoring system.

Financing activities provided $1,054 in the first six months of fiscal 2019, as compared to $173 used during the first six months of fiscal 2018. The main sources of cash in the first six months of fiscal 2019 were form borrowings on the Construction and Equipment loans for $908 and $285 respectively, and cash borrowed against the Revolving Facility of $409. The cash provided was partly offset by cash used for long-term debt payments of $451 and capital lease payments of $75. The main uses of cash in the first six months of fiscal 2018 were for long-term debt payments of $111 and capital lease payments of $63.

Capital Resources

Credit Facility

On June 23, 2017, we entered into a Credit Agreement with First Internet Bank of Indiana (“FIB”), which Credit Agreement as of March 31, 2019 had been amended on July 2, 2018, September 6, 2018 and September 28, 2018 (as amended, the “Credit Agreement”). The Credit Agreement included two term loans (the “Initial Term Loan” and “Subsequent Term Loan,” respectively), a revolving line of credit (the “Revolving Facility”), a construction draw loan (the “Construction Draw Loan”) and an equipment draw loan (the “Equipment Draw Loan”).

The Initial Term Loan for $4,500 bears interest at a fixed rate of 3.99%, with monthly principal and interest payments of approximately $33. The Initial Term Loan matures in June 2022. The balance on the Initial Term Loan at March 31, 2019 was $4,106. We used the proceeds from the Initial Term Loan to satisfy our indebtedness with Huntington Bank and terminated the related interest rate swap.

The July 2, 2018 amendment to the Credit Facility provided the Company with the Subsequent Term Loan in the amount of $5,500, the proceeds of which were used to fund a portion of the cash consideration for the acquisition of Seventh Wave Laboratories LLC. Amounts outstanding under the Subsequent Term Loan bear interest at a fixed per annum rate of 5.06%, with monthly principal and interest payments equal to $78. The Subsequent Term Loan matures July 2, 2023 and the balance on the Subsequent Term Loan at March 31, 2019 was $5,057.

The Revolving Facility provides a line of credit for up to $3,500 which the Company may borrow from time to time, subject to the terms of the Credit Agreement, including as may be limited by the amount of the Company’s outstanding eligible receivables. As of March 31, 2019, the Revolving Credit Facility was to have matured in June 2019 and bears interest at the Prime Rate (generally defined as the highest rate identified as the “Prime Rate” in The Wall Street Journal “Money Rates” column on the date the interest rate is to be determined, or if that date is not a publication date, on the publication date immediately preceding) less Twenty-five (25) Basis Points (0.25%). The balance on the Revolving Facility at March 31, 2019 was $409. We must pay accrued and unpaid interest on the outstanding balance under Revolving Facility on a monthly basis.

25

The September 28, 2018 amendment provided the Company with a Construction Draw Loan in a principal amount not to exceed $4,445 and an Equipment Draw Loan in a principal amount not to exceed $1,429. The Construction Draw Loan and Equipment Draw Loan each mature on March 28, 2025. As of March 31, 2019, there was a $1,193 aggregate balance on these loans.

Subject to certain conditions precedent, the Construction Draw Loan and Equipment Draw Loan each permit the Company to obtain advances aggregating up to the maximum principal amount available for such loan through March 28, 2020. Amounts outstanding under these loans bear interest at a fixed per annum rate of 5.20%. The Construction Draw Loan and the Equipment Draw Loan each require monthly payments of accrued interest on amounts outstanding through March 28, 2020, and thereafter monthly payments of principal and interest on amounts then outstanding through maturity.

The Credit Agreement contains various restrictive covenants, including restrictions on the Company's ability to dispose of assets, make acquisitions or investments, incur debt or liens, make distributions to shareholders or repurchase outstanding stock, enter into related party transactions and make capital expenditures, other than upon satisfaction of the conditions set forth in the Credit Agreement. As of March 31, 2019, the Credit Agreement also required us to maintain (i) a minimum debt service coverage ratio of not less than 1.25 to 1.0 and (ii) a cash flow coverage ratio whereby, the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended on such date may not exceed 4.50 to 1.00. Upon an event of default, which includes certain customary events such as, among other things, a failure to make required payments when due, a failure to comply with covenants, certain bankruptcy and insolvency events, and defaults under other material indebtedness, FIB may cease advancing funds, increase the interest rate on outstanding balances, accelerate amounts outstanding, terminate the agreement and foreclose on all collateral. The Company was in compliance with these covenants as of March 31, 2018.

As of March 31, 2019, the Company’s obligations under the Credit Agreement were guaranteed by BAS Evansville, Inc. (“BASEV”) as well as Seventh Wave Laboratories, LLC (“SWL”), each a wholly owned subsidiary of the Company. The Company’s obligations under the Credit Agreement and BASEV’s and SWL’s obligations under their respective Guaranties are secured by first priority security interests in substantially all of the assets of the Company, BASEV, and SWL, respectively, as well as mortgages on the Company’s and BASEV’s facilities in West Lafayette, Indiana and Evansville, Indiana, respectively and pledges of the Company's ownership interests in its subsidiaries.

On May 1, 2019, the Company entered into certain amendments to its credit arrangements with FIB. Refer to Note 12 to the Condensed Consolidated Financial Statements.

On January 28, 2015, the Company entered into a lease agreement with Cook Biotech, Inc. with an initial lease term of 10 years. The lease agreement has and will provide the Company with additional cash in the range of approximately $50 per month during the first year of the initial term to approximately $57 per month during the final year of the initial term.

The Company’s sources of liquidity for fiscal 2019 are expected to consist primarily of cash generated from operations, cash on-hand and additional borrowings available under our Credit Agreement, as amended May 1, 2019. Management believes that the resources described above will be sufficient to fund operations, planned capital expenditures and working capital requirements over the next twelve months.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item 3.

ITEM 4 - CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be disclosed timely, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures.

26

Management performs periodic evaluations to determine if our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report was performed under the supervision and with the participation of management, which resulted in a determination by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures were effective as of March 31, 2019.

On July 2, 2018, we acquired substantially all of the assets of Seventh Wave Laboratories, LLC. Seventh Wave’s business constituted 30.5% of our total assets at March 31, 2019 and 30.6% of our revenues for the six months ended March 31, 2019. As permitted by SEC guidance for newly acquired businesses, because it was not possible to complete an effective assessment of the acquired businesses’ internal controls over financial reporting as of March 31, 2019, the Company’s management has excluded such internal controls over financial reporting from its evaluation of the Company’s disclosure controls and procedures as disclosed herein. The Company’s management is in the process of reviewing the operations of the Seventh Wave business and implementing the Company’s internal control structure over the acquired operations.

Changes in Internal Controls

Other than described above, there were no changes in the Company's internal control over financial reporting during the second quarter of fiscal 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II

ITEM 1A - RISK FACTORS

Before investing in our securities you should carefully consider the risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018, including those disclosed under the heading “Risk Factors” appearing in Item 1A of Part I of the Form 10-K, as well as the information contained in this Quarterly Report. Realization of any of these risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.

The risks described in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q from time to time are not the only risks we face. New risk factors or risks that we currently deem immaterial emerge from time to time and it is not possible for us to predict all such risk factors, nor to assess the impact such risk factors might have on our business, financial condition and operating results, or the extent to which any such risk factor or combination of risk factors may impact our business, financial condition and operating results.

27

ITEM 6 - EXHIBITS

Number		Description of Exhibits
(10)	10.1	Employment Agreement, effective January 14, 2019, by and between the Company and Robert Leasure, Jr.
(31)	31.1	Certification of Chief Executive Officer (filed herewith).
	31.2	Certification of Chief Financial Officer (filed herewith).
(32)	32.1	Written Statement of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith)..
	32.2	Written Statement of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith)..
	101	XBRL data file (filed herewith)

28

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.
	(Registrant)
Date:   May 15, 2019	By:	/s/ Robert W. Leasure
	Robert W. Leasure
	President and Chief Executive Officer (Principal Executive Officer)

Date:   May 15, 2019	By:	/s/ Jill C. Blumhoff
	Jill C. Blumhoff
	Chief Financial Officer and Vice President of
	Finance (Principal Financial Officer and Accounting Officer)

29

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January 14, 2019, by and between BIOANALYTICAL SYSTEMS, INC., an Indiana corporation (the “Company”), and ROBERT LEASURE, JR. (the “Executive”).

R E C I T A L S

WHEREAS, the Company desires to employ the Executive and the Executive desires to accept such employment on the terms and conditions set forth herein;

A G R E E M E N T

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1.                  Employment. The Company agrees to employ the Executive and the Executive agrees to render his services to the Company, as its President and Chief Executive Officer, during the Term (as defined below). In connection with his employment as President and Chief Executive Officer, the Executive shall serve without additional payment or compensation of any kind as the President and Chief Executive Officer of any direct or indirect subsidiary or affiliate of the Company designated by the Board of Directors of the Company (the “Board”) (collectively, the “Subsidiaries”). The Executive agrees to use his best efforts to promote and further the business, reputation and good name of the Company and the Subsidiaries (collectively, the “Company Group”) and the Executive shall promptly and faithfully comply with all instructions, directions, requests, rules and regulations made or issued from time to time by the Company.

2.                  Term.

(a)               Unless earlier terminated by the Executive's death or Disability (as defined below), the term of the Executive's employment pursuant to this Agreement (the “Term”) shall continue until December 31, 2019, subject to extension for successive one-year periods thereafter upon the mutual agreement of the parties. 

(b)               Notwithstanding the foregoing, the Executive's employment may be terminated by the Company or by the Executive as provided in Section 4.

3.                  Compensation and Benefits. As full and complete compensation for all the Executive’s services hereunder, during the Term the Company shall pay the Executive the compensation and provide the Executive with the benefits described below.

(a)               Base Salary. During the Term, the Company shall pay the Executive an annual base salary at the per annum rate of $270,000 (“Base Salary”). The Board shall review the Executive’s Base Salary each year and shall have the right in its discretion to increase such Base Salary. With the Executive's prior consent, the Executive's Base Salary may be reduced by an amount and for a period mutually agreed between the Executive and the Company so long as such reduction is made in conjunction with similar reductions in base salary for other executives or employees of the Company.

(b)               Annual Incentive Plan. In addition to the Base Salary, during the Term, the Executive will have an annual incentive opportunity of up to 33% of the Executive’s Base Salary for the year. The amount of the annual incentive (“Bonus”) for any year will be determined, in its sole discretion, by the Compensation Committee based upon certain performance measures which shall be approved by the Compensation Committee in its discretion and communicated to the Executive by the end of each November during the Term; provided that the communication of the performance measures for the Company’s fiscal year ended September 30, 2019 will be communicated to the Executive by the end of January 2019 and the amount of the Bonus for such fiscal year shall be pro-rated based on the number of days the Executive is employed during such fiscal year. The Bonus for each year will be determined and payable by January 15 of the following year.

(c)               Quarterly Cash Bonus. The Executive shall be entitled to receive a cash bonus in the annual amount of $45,000, payable quarterly based upon the Executive achieving board-approved Company goals that are agreed upon prior to November 30 of each year during the Term; provided that the goals for the Company’s fiscal year ended September 30, 2019 will be agreed upon by the end of January 2019 and the amount of the bonus for such fiscal year shall be pro-rated based on the number of days the Executive is employed during such fiscal year.

(d)               Inducement Grant. On the first day of the Executive’s employment hereunder, the Executive shall be entitled to receive a one-time award of 34,615 Common Shares of the Company (the “Inducement Grant”) to be issued pursuant to the Company's 2018 Equity Incentive Plan (the “Plan”). The shares constituting the Inducement Grant shall not be subject to vesting or forfeiture. The Executive shall be responsible for payment of all taxes on the Inducement Grant and shall pay to the Company or otherwise make arrangements satisfactory to the Compensation Committee regarding payment of all such taxes no later than the date of the award. Without limiting the foregoing, the Executive may elect to have the minimum amount of any required tax withholdings with respect to the Inducement Grant satisfied by (a) having the Company withhold Common Shares otherwise constituting part of the Inducement Grant; (b) delivering to the Company unrestricted Common Shares already owned by the Executive; (c) any other manner permitted by law; or (d) any combination of the foregoing.

(e)               Long-Term Incentive Awards. On the first day of the Executive’s employment hereunder, in addition to the Inducement Grant, the Executive shall be awarded (i) options to purchase 55,000 of the Company’s common shares, and (ii) 10,000 restricted common shares (together, the “Initial Awards”) to be issued pursuant to the Plan. The Executive shall also be eligible to receive additional equity awards at such times, in such forms and in such amounts as may be determined by the Committee (as defined in the Plan) from time to time. The terms of the Initial Awards and any such additional awards shall be governed by the Plan and any applicable award agreement related thereto entered into between the Company and the Executive, except as otherwise provided herein.

2

(f)                Vacation. The Executive shall be entitled to vacation in accordance with Company policy, which vacation shall be taken on dates to be selected by mutual agreement of the Company and the Executive.

(g)               Reimbursement for Expenses. The Executive shall be entitled to reimbursement for ordinary and necessary business expenses incurred by the Executive in the course of his employment in accordance with the Company's policies from time to time.

4.                  Termination of Employment Prior to a Change in Control. The Executive's employment hereunder may be terminated during the Term in accordance with this Section 4.

(a)               Death. In the event the Executive dies during the Term, the Executive's employment shall automatically terminate on the date of death. In such event, the Executive's estate shall be entitled to receive his Base Salary and a prorated portion of his target Bonus for the year in which termination occurs, in each case through the effective date of the termination of his employment.

(b)               Disability. The Company, by written notice to the Executive, may immediately terminate the Executive’s employment in the event of the Executive's Disability. As used herein, "Disability" shall mean the Executive’s inability, with reasonable accommodation, to perform the essential functions of his position, by reason of physical or mental incapacity, for a consecutive period of 90 days or for a total period of 180 days in any 360-day period. In the event the Executive's employment is terminated due to the Executive's Disability, the Executive shall be entitled to receive his Base Salary and a prorated portion of his target Bonus for the year in which termination occurs, in each case through the effective date of the termination of his employment.

(c)               Termination for Cause by the Company. The Company, by written notice to the Executive, may immediately terminate the Executive’s employment for Cause. As used herein, a termination by the Company “for Cause” shall mean that the Executive has (i) been convicted of (or entered a plea of nolo contendre with respect to) a felony or any crime or offense lesser than a felony involving misappropriation of the property of the Company or any other member of the Company Group, whether such conviction or plea occurs before or after termination of employment with the Company; (ii) engaged in conduct that has caused demonstrable and material injury to any member of the Company Group, monetary or otherwise; (iii) failed to follow the reasonable instructions of the Board relating to the Executive's employment or the performance of the Executive's duties and responsibilities; (iv) been derelict, or engaged in other misconduct, in the performance of the Executive's duties for the Company or any other member of the Company Group and failed to cure such situation within thirty (30) days after receiving written notice thereof from the Board; and (v) engaged in the intentional disclosure or use of confidential information or trade secrets (each as defined in Section 7 of this Agreement) of the Company Group to a party unrelated to the Company Group, other than as reasonably determined in good faith by the Executive to be not contrary to the interests of the Company Group or reasonably believed in good faith by the Executive to be required by law. In the event the Executive's employment is terminated for Cause, the Executive shall be entitled to receive only his Base Salary through the effective date of the termination of his employment, and shall not be entitled to receive any other compensation.

3

(d)               Termination other than for Cause by the Company. The Company, by written notice to the Executive, may terminate the Executive's employment other than for Cause, effective as of the date specified by the Company in the notice, which date shall not be earlier than the date of the notice. In such event, the Executive shall be entitled to receive his Base Salary and a prorated portion of his target Bonus for the year in which termination occurs, in each case through the effective date of the termination of his employment.

(e)               Termination for Good Reason by the Executive. The Executive, by providing at least 30 days prior written notice to the Company, may terminate his employment hereunder for Good Reason, provided that the Company shall have the right to cure such Good Reason within such 30-day period. In order to constitute a valid notice of a termination for Good Reason, the notice must be received by the Board of Directors of the Company no later than 60 days following the initial occurrence of any event asserted to constitute Good Reason. As used herein, a termination by the Executive “for Good Reason” shall mean that (i) the Company has materially diminished the duties and responsibilities of the Executive with respect to the Company, or (ii) the Company has materially breached the terms of this Agreement. In the event the Executive's employment is terminated for Good Reason, the Executive shall be entitled to receive his Base Salary and a prorated portion of his target Bonus for the year in which termination occurs, in each case through the effective date of the termination of his employment.

(f)                Termination other than for Good Reason by the Executive. The Executive, by providing at least 30 days prior written notice to the Company, may terminate his employment other than for Good Reason. In such event, the Executive shall be entitled to receive only his Base Salary through the effective date of the termination of his employment and shall not be entitled to receive any other compensation.

(g)               Impact of Termination for Cause or without Good Reason on Equity Awards. If the Executive's employment is terminated (i) by the Company for Cause, or (ii) by the Executive other than for Good Reason, all options to purchase shares of the Company's common stock and other equity awards held by the Executive on the effective date of termination that have not vested as of such date shall terminate immediately following the termination of the Executive's employment.

(h)               Timing of Payments. The payment of any amounts due to the Executive pursuant to this Section 4 shall be paid no later than the next regular payroll date following the effective date of the termination of the Executive's employment.

4

5.                  Termination Following a Change in Control. If the Executive’s employment is terminated by the Company other than for Cause, or by the Executive for Good Reason, in either case within 12 months after a Change in Control:

(a)               the Company shall pay to the Executive as severance compensation an amount equal to one times the Executive’s Base Salary as then in effect plus one times the Executive’s Bonus paid for the Company’s last calendar year. This severance compensation shall be paid in a lump sum on the first day of the month occurring at least 30 days following the effective date of the termination of employment;

(b)               all outstanding options to purchase shares of the Company's common stock held by the Executive on the effective date of termination that have not vested as of such date shall vest immediately prior to the termination of the Executive's employment and remain exercisable for a period of 30 days following the effective date of such termination;

(c)               all outstanding unvested awards of restricted stock and all unvested restricted stock units held by the Executive on the effective date of termination shall vest immediately prior to the termination of the Executive's employment; and

(d)               the Executive shall be entitled to receive, at the time when the severance compensation provided for in clause (a) of this Section 5 is paid, a pro-rata portion (based on the number of days during the applicable performance period on which the Executive was employed) of the number of such performance shares that would have been earned by the Executive if the performance conditions related thereto were satisfied at the target level for such awards and the Executive had been employed on the date required to earn such shares.

As used herein, “Change in Control” shall have the meaning specified in the Plan.

6.                  No Other Compensation; Withholding. Except as otherwise expressly provided herein, or in any other written document executed by the Company and the Executive, no other compensation or other consideration shall become due or payable to the Executive on account of the services rendered to the Company Group. The Company shall have the right to deduct and withhold from the compensation payable to the Executive hereunder any amounts required to be deducted and withheld under the provisions of any statute, regulation, ordinance, order or any other amendment thereto, heretofore or hereafter enacted, requiring the withholding or deduction of compensation.

7.                  Confidential Information; Inventions; Code of Conduct.

(a)               The Executive recognizes and acknowledges that he shall receive in the course of his employment hereunder certain confidential information and trade secrets concerning the Company Group’s business and affairs which may be of great value to the Company Group. The Executive therefore agrees that he will not disclose any such information relating to the Company Group, the Company Group’s personnel or their operations other than in the ordinary course of business or in any way use such information in any manner which could adversely affect the Company Group’s business. For purposes of this Agreement, the terms “trade secrets” and “confidential information” shall include any and all information concerning the business and affairs of the Company Group and any division or other affiliate of the Company Group that is not generally available to the public. The Company may, formally or informally, establish, adopt, implement or utilize procedures or actions that are designed to monitor or protect Company Group's confidential information. Executive hereby irrevocably consents, without the right to receive further notice, to any or all of these procedures or actions that may be established, adopted, implemented, utilized or enforced by the Company Group. The Company Group shall have the right to establish, adopt, implement, utilize or enforce these procedures at any time during Executive's employment with Company Group and during any period in which any restrictive covenants contained in this Agreement are facially or legally applicable. Executive expressly WAIVES the right to challenge the enforceability of any of these procedures in any legal action seeking to enforce this Agreement or to recover for Executive's breach or alleged breach of this Agreement.

5

(b)               The parties foresee that Executive may make inventions or create other intellectual property in the course of his duties hereunder and agree that in this respect the Executive has a special responsibility to further the interests of the Company and its affiliates. On or before his first day of employment and as a condition to receiving the Inducement Grant and the Initial Awards, Executive shall execute and deliver to the Company a copy of the Company’s standard invention disclosure and assignment agreement.

(c)               Executive agrees to abide by all the terms and conditions of the Company’s Code of Conduct and Ethics.

8.                  Non-Competition.

(a)               The Executive agrees that without the prior written consent of the Board during the Term and for a period of 12 months following the termination of the Executive's employment, he will not participate as an advisor, partner, joint venturer, investor, lender, consultant or in any other capacity in any business transaction or proposed business transaction (i) with respect to which the Executive had a material personal involvement on behalf of the Company Group during the last 12 months of his employment with the Company, or (ii) that could reasonably be expected to compete with the Company Group’s business or operations or proposed or contemplated business or transactions of the Company Group that are (A) known by the Executive as of the date of such termination or expiration, and (B) contemplated by the Company Group to proceed during the 12-month period following such termination or expiration. For these purposes, the mere ownership by the Executive of securities of a public company not in excess of 2% of any class of such securities shall not be considered to be competition with the Company Group.

(b)               During any period when the Company is providing severance compensation to the Executive, Executive agrees to refrain from any competition with Company Group.

6

(c)               To the fullest extent permitted by applicable law, for a period of 12 months after the termination of employment with Company (for any reason, including resignation), Executive, on behalf of any entity in competition with the Company Group, in any capacity, may not, directly or indirectly, in a competing capacity, solicit or obtain any business from any present customer of the Company Group with whom Executive had contact or received information from the Company Group. It is understood and agreed that "present customer" is defined to mean any entity with whom the Company Group had an "ongoing business relationship" at the time of the termination of Executive's employment with the Company. An "ongoing business relationship" (specifically excluding non-competing vendor relationships) is generally understood and agreed to mean: (i) services or goods were provided by the Company Group to the entity during the employment of Executive by Company; (ii) services or goods had been contracted for or ordered by the entity during the employment of Executive by the Company Group; or (iii) negotiations were in progress between the entity and the Company Group for the providing of goods or services by the Company Group to the entity at the time of the termination of the employment of Executive. It is understood and agreed that past customers and prospective customers are not "present customers" protected under the terms of this provision.

(d)               To the fullest extent permitted by applicable law, in recognition of the global nature of the Company Group's business, and Executive's access to the Company Group's confidential information, for a period of 12 months after the termination of employment with Company (for any reason, including resignation), Executive, on behalf of any entity in competition with the Company Group, may not, directly or indirectly, compete with the Company Group: (i) anywhere in the world; (ii) in North America; (iii) in the United States; (iv) in Indiana; (v) within a 25-mile radius of any location of the Company Group with which Executive had operational involvement.

9.                  Non-Solicitation. The Executive agrees that during the Term, and for a period of 12 months following the termination of the Executive's employment, he shall not, without the prior written consent of the Company, directly or indirectly, employ or retain, or have or cause any other person or entity to employ or retain, any person who was employed by the Company Group or any of its divisions or affiliates while the Executive was employed by the Company, or directly or indirectly solicit or encourage any such person for employment or to leave the employ of the Company Group.

10.              Breach of this Agreement. If the Executive commits a breach, or threatens to commit a breach, of any of the provisions of Sections 7, 8 or 9 of this Agreement, then the Company shall have the right and remedy to have those provisions specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed by the Executive that the rights and privileges of the Company granted in Sections 7, 8 and 9 are of a special, unique and extraordinary character and any such breach or threatened breach will cause great and irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

11.              Notices. All notices and other communications required or permitted hereunder shall be in writing (including facsimile, telegraphic, telex or cable communication) and shall be deemed to have been duly given when delivered by hand, or mailed, certified or registered mail, return receipt requested and postage prepaid, if to the Executive, to the Executive’s address as set forth on the payroll records of the Company on the date of such notice; if to the Company, as follows, with a copy to each member of the Board:

7

Bioanalytical Systems, Inc.

2701 Kent Avenue

West Lafayette, IN 47906

Attn: Chief Financial Officer

12.              Applicable Law. This Agreement was negotiated and entered into within the State of Indiana. All matters pertaining to this Agreement shall be governed by the laws of the State of Indiana applicable to contracts made and to be performed wholly therein, without regard to conflict of laws.

13.              Entire Agreement; Modification; Consents and Waivers. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior agreements or understandings, written or oral, between the parties with respect to the subject matter hereof. No interpretation, change, termination or waiver of or extension of time for performance under any provision of this Agreement shall be binding upon any party unless in writing and signed by the party intended to be bound thereby. Except as otherwise provided in this Agreement, no waiver of or other failure to exercise any right under or default or extension of time for performance under any provision or this Agreement shall affect the right of any party to exercise any subsequent right under or otherwise enforce said provision or any other provision hereof or to exercise any right or remedy in the event of any other default, whether or not similar.

14.              Severability. The parties acknowledge that, in their view, the terms of this Agreement are fair and reasonable as of the date signed by them, including as to the scope and duration of post-termination activities. Accordingly, if any one or more of the provisions contained in this Agreement shall for any reason, whether by application of existing law or law which may develop after the date of this Agreement, be determined by a court of competent jurisdiction to be excessively broad as to scope of activity, duration or territory, or otherwise unenforceable, the parties hereby jointly request such court to construe any such provision by limiting or reducing it so as to be enforceable to the maximum extent in favor of the Company compatible with then-applicable law. If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall nonetheless be determined by a court of competent jurisdiction to be invalid, void or unenforceable, then the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

15.              Assignment. The Company may, at its election, assign this Agreement or any of its rights hereunder. This Agreement may not be assigned by the Executive.

16.              Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

8

17.              Jurisdiction and Venue. Executive agrees to and hereby does submit to jurisdiction before any state or federal court of record in Marion County, Indiana, and Executive hereby waives any right to raise the questions of jurisdiction and venue in any action that the Company may bring to any such court against Executive. Process in any action or proceeding referred to in the preceding sentence may be served on any party by U.S. registered mail to the parties at the respective addresses referenced in Section 11 of this Agreement.

18.              Survival. The provisions of Sections 7 through 20 of this Agreement shall survive any expiration or termination of this Agreement.

19.              Impact on Equity Awards. In the case of a termination of the Executive's employment under the circumstances provided for in this Agreement, the vesting and other terms of any equity awards (including options to purchase stock of the Company, restricted stock, restricted stock units and performance shares) held by the Executive on the date of such termination shall be governed by the applicable provisions of this Agreement notwithstanding any contrary or conflicting provision of any plan under which any such award may have been made or any award agreement or other agreement related to any such equity award, whether now existing or hereafter executed between the Company and the Executive. Any and all such contrary or conflicting provisions in any such award agreement or other agreement shall be amended by the execution of this Agreement to provide for vesting and other treatment in such circumstances as set forth in this Agreement, but the remaining terms of such agreements shall be unaffected hereby. For the avoidance of doubt, the parties agree that no such outstanding equity award shall vest solely due to the occurrence of a Change in Control.

20.              Indemnification. The Company shall, to the fullest extent allowed by law, defend, indemnify and hold harmless the Executive from and against any and all demands, claims, suits, liabilities, actions asserted or brought against the Executive or in which the Executive is made a party, including, without limitation, all litigation costs and attorneys’ fees incurred by the Executive or judgments rendered against the Executive, in connection with any matter arising within the course and scope of Executive’s employment with the Company or service as an officer, director or manager of the Company or any of the Subsidiaries. The right of the Executive to indemnification hereunder shall vest at the time of occurrence or performance of any event, act or omission giving rise to any demand, claim, suit, liability, action or legal proceeding of the nature referred to in this Section 20 and, once vested, shall survive the termination of Executive’s employment with the Company for any reason.

21.              Section 409A Compliance.

(a)               Any payments conditioned upon a termination of the Executive’s employment will be deemed to be conditioned upon the Executive’s separation from service within the meaning of Treasury Regulation Section 1.409A-1(h) and will be construed and interpreted accordingly. If the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Executive’s separation from service, then the Executive shall not be entitled to any severance payments or other benefits pursuant to this Agreement until the earlier of (a) the date which is six months after the date of the Executive’s separation from service, or (b) the date of the Executive’s death. This paragraph shall only apply if, and to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation Section 1.409A-3(i)(2). Any amounts otherwise payable to the Executive upon or in the six-month period following the Executive’s separation from service that are not so paid by reason of this paragraph shall be paid to the Executive (or the Executive’s estate, as the case may be) as soon as practicable (and in all events within twenty days) after the expiration of such six-month period or (if applicable, the date of the Executive’s death).

9

(b)               Any taxable reimbursement of expenses payable to the Executive shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred. Expense reimbursements and in-kind benefits provided to the Executive shall not be subject to liquidation or exchange for another benefit and the amount of such reimbursements or in-kind benefits that the Executive receives in one taxable year shall not affect the amount of such reimbursements or benefits that the Executive may receive in any other taxable year.

(c)               It is intended that any amounts payable under this Agreement and the Company’s and the Executive’s exercise of any authority or discretion hereunder shall comply with, and avoid the imputation of any tax, penalty or interest under Section 409A of the Code. This Agreement shall be construed and interpreted consistent with that intent. Should the Company pay the Executive contrary to clause (a) or (b) of Section 21(a) above, the Company shall indemnify the Executive for any taxes due thereon as a result.

22.              Adjustments to Payments.

(a)               Notwithstanding any other provision of this Agreement, if any payment or benefit Executive would receive pursuant to this Agreement or otherwise, including accelerated vesting of any equity compensation (all such payments and/or benefits hereinafter, “Payment”), would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either (x) provided to the Executive in full, or (y) provided to the Executive to such lesser extent which would result in no portion of such Payment being subject to the excise tax, further reduced by $5,000 (including such further reduction, the “Cutback Amount”), whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, such excise tax and other applicable taxes, (all computed at the highest applicable marginal rates), results in the receipt by the Executive, on an after-tax basis, of the greatest amount of the Payment, notwithstanding that all or a portion of such Payment may be subject to the excise tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Cutback Amount, reduction shall occur in the following order: (A) cash payments shall be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering such excise tax will be the first cash payment to be reduced; (B) accelerated vesting of performance-based equity awards shall be cancelled or reduced next and in the reverse order of the date of grant for such awards (i.e., the vesting of the most recently granted awards will be reduced first), with full-value awards reduced before any performance-based stock option or stock appreciation rights are reduced; (C) health and welfare benefits shall be reduced and in reverse chronological order such that the benefit owed on the latest date following the occurrence of the event triggering such excise tax will be the first benefit to be reduced; and (D) accelerated vesting of time-based equity awards shall be cancelled or reduced last and in the reverse order of the date of grant for such awards (i.e., the vesting of the most recently granted awards will be reduced first), with full-value awards reduced before any time-based stock option or stock appreciation rights are reduced.

10

(b)               The Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder and perform the foregoing calculations.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.  The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within 15 calendar days after the date on which right to a Payment is triggered (if requested at that time by the Company or Executive).  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

[Remainder of page intentionally left blank]

11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

BIOANALYTICAL SYSTEMS, INC.
By:	/s/ Jill C. Blumhoff
	Jill C. Blumhoff
	Chief Financial Officer,
	Vice President - Finance
ROBERT LEASURE, JR.

12

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert W. Leasure, Jr., President and Chief Executive Officer, certify that:

1. I have reviewed this 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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.

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 15, 2019 /s/ Robert W. Leasure, Jr.                 Robert W. Leasure, Jr. President and Chief Executive Officer

EX-31.2

Exhibit 31.2 

CERTIFICATIONS

I, Jill C. Blumhoff, Vice President of Finance and Chief Financial Officer, certify that:

1. I have reviewed this 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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.

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 15, 2019 /s/ Jill C. Blumhoff                        Jill C. Blumhoff
Vice President of Finance and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certifications of Acting Principal Executive Officer

Pursuant to Section 906

Of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, the President and Chief Executive Officer of Bioanalytical Systems Inc. (the “Company”), hereby certifies that, to the best of his knowledge:

(a) the Form 10-Q Quarterly Report of the Company for the three and six months ended March 31, 2019 filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:  /s/  Robert W. Leasure, Jr.                

Robert W. Leasure, Jr.
President and Chief Executive Officer
Date:   May 15, 2019

EX-32.2

Exhibit 32.2

Certifications of Chief Financial Officer

Pursuant to Section 906

Of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, the Vice President of Finance and Chief Financial Officer of Bioanalytical Systems Inc. (the “Company”), hereby certifies that, to the best of her knowledge:

(a) the Form 10-Q Quarterly Report of the Company for the three and six months ended March 31, 2019 filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:  /s/  Jill C. Blumhoff              

Jill C. Blumhoff
Vice President of Finance and Chief Financial Officer
Date:   May 15, 2019

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2019	May 10, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	BIOANALYTICAL SYSTEMS INC
Entity Central Index Key	0000720154
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Trading Symbol	BASI
Entity Common Stock, Shares Outstanding		10,290,531
Entity Emerging Growth Company	false
Entity Small Business	true

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Sep. 30, 2018
Current assets:
Cash and cash equivalents	$ 520	$ 773
Accounts receivable
Trade, net of allowance of $1,891 at March 31, 2019 and $1,948 at September 30, 2018	4,149	4,128
Unbilled revenues and other	716	1,012
Inventories, net	1,103	1,182
Prepaid expenses	1,194	966
Total current assets	7,682	8,061
Property and equipment, net	17,787	16,610
Goodwill	3,072	3,072
Other intangible assets, net	3,060	3,318
Lease rent receivable	124	115
Deferred tax asset	31	62
Other assets	27	30
Total assets	31,783	31,268
Current liabilities:
Accounts payable	3,525	3,192
Restructuring liability	503	1,117
Accrued expenses	1,230	1,571
Customer advances	5,583	4,925
Revolving line of credit	409	0
Current portion of capital lease obligation	20	87
Current portion of long-term debt	930	909
Total current liabilities	12,200	11,801
Capital lease obligation, less current portion	28	37
Long-term debt, less current portion, net of debt issuance costs	9,265	8,546
Total liabilities	21,493	20,384
Shareholders' equity:
Preferred shares, authorized 1,000,000 shares, no par value: 35 Series A shares at $1,000 stated value issued and outstanding at March 31, 2019 and at September 30, 2018	35	35
Common shares, no par value: Authorized 19,000,000 shares; 10,290,531 issued and outstanding at March 31, 2019 and 10,245,277 at September 30, 2018	2,534	2,523
Additional paid-in capital	24,682	24,557
Accumulated deficit	(16,961)	(16,231)
Total shareholders' equity	10,290	10,884
Total liabilities and shareholders' equity	$ 31,783	$ 31,268

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Sep. 30, 2018
Allowance for Doubtful Accounts Receivable, Current	$ 1,891	$ 1,948
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	19,000,000	19,000,000
Common Stock, Shares, Issued	10,290,531	10,245,277
Common Stock, Shares, Outstanding	10,290,531	10,245,277
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized	1,000,000	1,000,000
Preferred Stock, No Par Value	$ 0	$ 0
Preferred Stock, Shares Issued	35	35
Preferred Stock, Shares Outstanding	35	35

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Total revenue	$ 9,344	$ 5,944	$ 17,969	$ 11,321
Total cost of revenue	6,783	4,204	12,989	8,000
Gross profit	2,561	1,740	4,980	3,321
Operating expenses:
Selling	655	303	1,308	597
Research and development	145	149	269	288
General and administrative	2,210	1,178	3,811	2,315
Total operating expenses	3,010	1,630	5,388	3,200
Operating (loss) income	(449)	110	(408)	121
Interest expense	(122)	(48)	(248)	(100)
Other income	3	4	4	4
Net (loss) income before income taxes	(568)	66	(652)	25
Income taxes (benefit) expense	1	11	2	(56)
Net (loss) income	(569)	55	(654)	81
Comprehensive (loss) income	$ (569)	$ 55	$ (654)	$ 81
Basic net (loss) income per share	$ (0.06)	$ 0.01	$ (0.06)	$ 0.01
Diluted net (loss) income per share	$ (0.06)	$ 0.01	$ (0.06)	$ 0.01
Weighted common shares outstanding:
Basic	10,290	8,245	10,268	8,245
Diluted	10,290	8,789	10,268	8,793
Service [Member]
Total revenue	$ 8,131	$ 5,030	$ 15,866	$ 9,555
Total cost of revenue	5,951	3,662	11,548	6,935
Product [Member]
Total revenue	1,213	914	2,103	1,766
Total cost of revenue	$ 832	$ 542	$ 1,441	$ 1,065

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Shares [Member]	Common Shares [Member]	Additional paid-in capital [Member]	Accumulated deficit [Member]
Balance at Sep. 30, 2017	$ 8,467	$ 1,035	$ 2,023	$ 21,446	$ (16,037)
Balance (in shares) at Sep. 30, 2017		1,035	8,243,896
Comprehensive income (loss):
Net (loss) income	26				26
Stock based compensation	34			34
Stock option exercises	1			1
Stock option exercises (in shares)			305
Balance at Dec. 31, 2017	8,528	$ 1,035	$ 2,023	21,481	(16,011)
Balance (in shares) at Dec. 31, 2017		1,035	8,244,201
Balance at Sep. 30, 2017	8,467	$ 1,035	$ 2,023	21,446	(16,037)
Balance (in shares) at Sep. 30, 2017		1,035	8,243,896
Comprehensive income (loss):
Net (loss) income	81
Balance at Mar. 31, 2018	8,618	$ 1,035	$ 2,023	21,516	(15,956)
Balance (in shares) at Mar. 31, 2018		1,035	8,245,201
Balance at Dec. 31, 2017	8,528	$ 1,035	$ 2,023	21,481	(16,011)
Balance (in shares) at Dec. 31, 2017		1,035	8,244,201
Comprehensive income (loss):
Net (loss) income	55				55
Stock based compensation	34			34
Stock option exercises	1			1
Stock option exercises (in shares)			1,000
Balance at Mar. 31, 2018	8,618	$ 1,035	$ 2,023	21,516	(15,956)
Balance (in shares) at Mar. 31, 2018		1,035	8,245,201
Balance at Sep. 30, 2018	10,884	$ 35	$ 2,523	24,557	(16,231)
Balance (in shares) at Sep. 30, 2018		35	10,245,277
Adoption of accounting standard	(76)				(76)
Comprehensive income (loss):
Net (loss) income	(85)				(85)
Stock based compensation	25			25
Balance at Dec. 31, 2018	10,748	$ 35	$ 2,523	24,582	(16,392)
Balance (in shares) at Dec. 31, 2018		35	10,245,277
Balance at Sep. 30, 2018	10,884	$ 35	$ 2,523	24,557	(16,231)
Balance (in shares) at Sep. 30, 2018		35	10,245,277
Comprehensive income (loss):
Net (loss) income	(654)
Balance at Mar. 31, 2019	10,290	$ 35	$ 2,534	24,682	(16,961)
Balance (in shares) at Mar. 31, 2019		35	10,290,531
Balance at Dec. 31, 2018	10,748	$ 35	$ 2,523	24,582	(16,392)
Balance (in shares) at Dec. 31, 2018		35	10,245,277
Comprehensive income (loss):
Net (loss) income	(569)				(569)
Stock based compensation	110		$ 11	99
Stock based compensation (in shares)			44,615
Stock option exercises	1			1
Stock option exercises (in shares)			639
Balance at Mar. 31, 2019	$ 10,290	$ 35	$ 2,534	$ 24,682	$ (16,961)
Balance (in shares) at Mar. 31, 2019		35	10,290,531

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities:
Net (loss) income	$ (654)	$ 81
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	1,324	782
Stock based compensation	124	68
Provision for doubtful accounts	(20)	(4)
Gain on disposal of property and equipment	(3)	(1)
Unrealized foreign currency gains	(136)	0
Changes in operating assets and liabilities:
Accounts receivable	286	(3)
Inventories	79	(87)
Income tax accruals	29	(61)
Prepaid expenses and other assets	(227)	73
Accounts payable	(145)	(214)
Accrued expenses	(329)	81
Customer advances	583	127
Net cash provided by operating activities	911	842
Investing activities:
Capital expenditures	(2,218)	(433)
Proceeds from sale of equipment	0	2
Net cash used by investing activities	(2,218)	(431)
Financing activities:
Payments of long-term debt	(451)	(111)
Payments of debt issuance costs	(22)	0
Payments on revolving line of credit	(11,505)	(5,085)
Borrowings on revolving line of credit	11,914	5,085
Borrowing on construction loan	908	0
Borrowing on equipment loan	285	0
Proceeds from exercise of stock options	1	1
Payments on capital lease obligations	(76)	(63)
Net cash provided (used in) by financing activities	1,054	(173)
Net increase (decrease) in cash and cash equivalents	(253)	238
Cash and cash equivalents at beginning of period	773	434
Cash and cash equivalents at end of period	520	672
Supplemental disclosure of non-cash financing activities:
Cash paid for interest	$ 225	$ 94

XML

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Bioanalytical Systems, Inc. and its subsidiaries (“We,” “Our,” “Us,” the “Company” or “BASi”) engage in contract laboratory research services and other services related to pharmaceutical development. We also manufacture scientific instruments for life sciences research, which we sell with related software for use by pharmaceutical companies, universities, government research centers and medical research institutions. Our customers are located throughout the world.

We have prepared the accompanying unaudited interim condensed consolidated 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, included in the Company’s annual report on Form 10-K for the year ended September 30, 2018. Certain amounts in the fiscal 2018 consolidated financial statements have been reclassified to conform to the fiscal 2019 presentation without affecting previously reported net income or stockholders’ equity. In the opinion of management, the condensed consolidated financial statements for the three and six months ended March 31, 2019 and 2018 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, 2019. The results of operations for the three and six months ended March 31, 2019 may not be indicative of the results for the year ending September 30, 2019.

XML

STOCK-BASED COMPENSATION

6 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

2. STOCK-BASED COMPENSATION

The Company’s 2008 Stock Option Plan (“the Plan”) was used to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees and aligning their interests with those of our shareholders. The Plan is described more fully in Note 9 in the Notes to the Consolidated Financial Statements in our Form 10-K for the fiscal year ended September 30, 2018. In March 2018, our shareholders approved the amendment and restatement of the Plan in the form of the Amended and Restated 2018 Equity Incentive Plan (the “Equity Plan”) and the Company currently grants equity awards from the Equity Plan. The purpose of the Equity Plan is to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees. The maximum number of common shares that may be granted under the Equity Plan is 700 shares.

All options granted under the Plan and the Equity Plan had an exercise price equal to the fair market value of the underlying common shares on the date of grant. We expense the estimated fair value of stock options over the vesting periods of the grants. We recognize expense for awards subject to graded vesting using the straight-line attribution method, reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment is recognized at that time. Stock based compensation expense for the three and six months ended March 31, 2019 was $99 and $124, respectively. Stock based compensation expense for the three and six months ended March 31, 2018 was $34 and $68, respectively. The additional expense in the three months ending March 31, 2019 was due to the grants issued to our new Chief Executive Officer in January 2019 and option grants to all employees that were employed as of February 6, 2019.

A summary of our stock option activity for the six months ended March 31, 2019 is as follows (in thousands except for share prices):

	Options (shares)			Weighted- Average Exercise Price		Weighted- Average Grant Date Fair Value
Outstanding – September 30, 2018		301		$	1.73	$	1.38
Exercised		(1	)	$	1.40	$	1.15
Granted		403		$	1.41	$	1.04
Forfeited		(4	)	$	1.74	$	1.38
Outstanding - March 31, 2019		699		$	1.55	$	1.18

The weighted-average assumptions used to compute the fair value of the options granted in the six months ended March 31, 2019 were as follows:

Risk-free interest rate	2.58	%
Dividend yield	0.00	%
Volatility of the expected market price of the Company's common shares	72.0%-72.5	%
Expected life of the options (years)	8.0

As of March 31, 2019, our total unrecognized compensation cost related to non-vested stock options was $500 and is expected to be recognized over a weighted-average service period of 1.6 years.

A summary of our restricted share activity for the six months ended March 31, 2019 is as follows:

	Restricted Shares
Outstanding – September 30, 2018		-
Granted		45
Vested		(35	)
Forfeited		-
Outstanding - March 31, 2019		10

As of March 31, 2019, our total unrecognized compensation cost related to non-vested restricted stock was $12 and is expected to be recognized over a weighted-average service period of 1.79 years. The total fair value of the shares vested during the three and six months ended March 31, 2019 was $44.

XML

INCOME (LOSS) PER SHARE

6 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

INCOME (LOSS) PER SHARE

3. INCOME (LOSS) PER SHARE

We compute basic income (loss) per share using the weighted average number of common shares outstanding. The Company has two categories of dilutive potential common shares: Series A preferred shares issued in May 2011 in connection with our registered direct offering and shares issuable upon exercise of options. We compute diluted earnings per share using the if-converted method for preferred stock and the treasury stock method for stock options, respectively. Shares issuable upon exercise of 699 options and 17 common shares issuable upon conversion of preferred shares were not considered in computing diluted income (loss) per share for the three and six months ended March 31, 2019 because they were anti-dilutive.

The following table reconciles our computation of basic income per share to diluted income per share:

	Three Months Ended March 31,					Six Months Ended March 31,
	2019			2018		2019			2018
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$	(569	)	$	55	$	(654	)	$	81
Weighted average common shares outstanding		10,290			8,245		10,268			8,245
Basic net income (loss) per share	$	(0.06	)	$	0.01	$	(0.06	)	$	0.01
Diluted net income per share:
Diluted net income (loss) applicable to common shareholders	$	(569	)	$	55	$	(654	)	$	81
Weighted average common shares outstanding		10,290			8,245		10,268			8,245
Plus: Incremental shares from assumed conversions:
Series A preferred shares		-			518		-			518
Dilutive stock options/shares		-			26		-			30
Diluted weighted average common shares outstanding		10,290			8,789		10,268			8,793
Diluted net income (loss) per share	$	(0.06	)	$	0.01	$	(0.06	)	$	0.01

XML

INVENTORIES

6 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

INVENTORIES

4. INVENTORIES

Inventories consisted of the following:

	March 31, 2019			September 30, 2018
Raw materials	$	841		$	939
Work in progress		191			89
Finished goods		264			342
	$	1,296		$	1,370
Obsolescence reserve		(193	)		(188	)
	$	1,103		$	1,182

XML

SEGMENT INFORMATION

6 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

SEGMENT INFORMATION

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 2 to the Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended September 30, 2018.

	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Revenue:
Service	$	8,131		$	5,030		$	15,866		$	9,555
Product		1,213			914			2,103			1,766
	$	9,344		$	5,944		$	17,969		$	11,321
Operating Income (Loss)
Service	$	877		$	918		$	1,513		$	1,699
Product		30			52			(50	))		84
Corporate		(1,355	)		(861	)		(1,870	)		(1,662	)
	$	(449	)	$	110		$	(408	)	$	121
Interest expense		(122	)		(48	)		(248	)		(100	)
Other income		3			4			4			4
Income (loss) before income taxes	$	(568	)	$	66		$	(652	)	$	25

XML

INCOME TAXES

6 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

6. INCOME TAXES

We use the asset and liability method of accounting for income taxes. We recognized deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. We record valuation allowance based on a determination of the expected realization of tax assets.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. We measure the amount of the accrual for which an exposure exists as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon settlement of the position.

At March 31, 2019 and September 30, 2018, we had no liability for uncertain income tax positions.

We record interest and penalties accrued in relation to uncertain income tax positions as a component of income tax expense. Any changes in the liability for uncertain tax positions would impact our effective tax rate. We do not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months.

We file income tax returns in the U.S. and several U.S. states. We remain subject to examination by taxing authorities in the jurisdictions in which we have filed returns for years after 2013.

XML

DEBT

6 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

DEBT

7. DEBT

Credit Facility

On June 23, 2017, we entered into a Credit Agreement with First Internet Bank of Indiana (“FIB”), which Credit Agreement as of March 31, 2019 had been amended on July 2, 2018, September 6, 2018 and September 28, 2018 (as amended, the “Credit Agreement”). The Credit Agreement included two term loans (the “Initial Term Loan” and “Subsequent Term Loan,” respectively), a revolving line of credit (the “Revolving Facility”), a construction draw loan (the “Construction Draw Loan”) and an equipment draw loan (the “Equipment Draw Loan”).

The Initial Term Loan for $4,500 bears interest at a fixed rate of 3.99%, with monthly principal and interest payments of approximately $33. The Initial Term Loan matures in June 2022. The balance on the Initial Term Loan at March 31, 2019 was $4,106. We used the proceeds from the Initial Term Loan to satisfy our indebtedness with Huntington Bank and terminated the related interest rate swap.

The July 2, 2018 amendment to the Credit Facility provided the Company with the Subsequent Term Loan in the amount of $5,500, the proceeds of which were used to fund a portion of the cash consideration for the acquisition of Seventh Wave Laboratories LLC. Amounts outstanding under the Subsequent Term Loan bear interest at a fixed per annum rate of 5.06%, with monthly principal and interest payments equal to $78. The Subsequent Term Loan matures July 2, 2023 and the balance on the Subsequent Term Loan at March 31, 2019 was $5,057.

The Revolving Facility provides a line of credit for up to $3,500 which the Company may borrow from time to time, subject to the terms of the Credit Agreement, including as may be limited by the amount of the Company’s outstanding eligible receivables. As of March 31, 2019, the Revolving Credit Facility was to have matured in June 2019 and bears interest at the Prime Rate (generally defined as the highest rate identified as the “Prime Rate” in The Wall Street Journal “Money Rates” column on the date the interest rate is to be determined, or if that date is not a publication date, on the publication date immediately preceding) less Twenty-five (25) Basis Points (0.25%). The balance on the Revolving Facility was $409 and $0 as of March 31, 2019 and September 30, 2018, respectively. We must pay accrued and unpaid interest on the outstanding balance under the Revolving Facility on a monthly basis.

The September 28, 2018 amendment provided the Company with the Construction Draw Loan in a principal amount not to exceed $4,445 and the Equipment Draw Loan in a principal amount not to exceed $1,429. The Construction Draw Loan and Equipment Draw Loan each mature on March 28, 2025. As of March 31, 2019, there was a $1,193 aggregate balance on these loans.

Subject to certain conditions precedent, a Construction Draw Loan and an Equipment Draw Loan each permit the Company to obtain advances aggregating up to the maximum principal amount available for such loan through March 28, 2020. Amounts outstanding under these loans bear interest at a fixed per annum rate of 5.20%. The Construction Draw Loan and the Equipment Draw Loan each require monthly payments of accrued interest on amounts outstanding through March 28, 2020, and thereafter monthly payments of principal and interest on amounts then outstanding through maturity.

Long term debt is detailed in the table below.

	As of:
	March 31, 2019			September 30, 2018
Initial term loan	$	4,106		$	4,222
Subsequent term loan		5,057			5,392
Construction loans		1,193			-
		10,356			9,614
Less: Current portion		(930	)		(909	)
Less: Debt issue costs not amortized		(161	)		(159	)
Total Long-term debt	$	9,265		$	8,546

The Credit Agreement contains various restrictive covenants, including restrictions on the Company's ability to dispose of assets, make acquisitions or investments, incur debt or liens, make distributions to shareholders or repurchase outstanding stock, enter into related party transactions and make capital expenditures, other than upon satisfaction of the conditions set forth in the Credit Agreement. As of March 31, 2019, the Credit Agreement also required us to maintain (i) a minimum debt service coverage ratio of not less than 1.25 to 1.0 and (ii) a cash flow coverage ratio whereby, the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended on such date may not exceed 4.50 to 1.00. Upon an event of default, which includes certain customary events such as, among other things, a failure to make required payments when due, a failure to comply with covenants, certain bankruptcy and insolvency events, and defaults under other material indebtedness, FIB may cease advancing funds, increase the interest rate on outstanding balances, accelerate amounts outstanding, terminate the agreement and foreclose on all collateral.

As of March 31, 2019, the Company’s obligations under the Credit Agreement were guaranteed by BAS Evansville, Inc. (“BASEV”) as well as Seventh Wave Laboratories, LLC (“SWL”), each a wholly owned subsidiary of the Company. The Company’s obligations under the Credit Agreement and BASEV’s and SWL’s obligations under their respective Guaranties are secured by first priority security interests in substantially all of the assets of the Company, BASEV, and SWL, respectively, as well as mortgages on the Company’s and BASEV’s facilities in West Lafayette, Indiana and Evansville, Indiana, respectively and pledges of the Company’s ownership interests in its subsidiaries.

On May 1, 2019, the Company entered into certain amendments to its credit arrangements with FIB. Refer to Note 12 to the Condensed Consolidated Financial Statements.

XML

ACCRUED EXPENSES

6 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

ACCRUED EXPENSES

8. ACCRUED EXPENSES

As part of a fiscal 2012 restructuring, we accrued for lease payments at the cease use date for our United Kingdom facility and have considered free rent, sublease rentals and the number of days it would take to restore the space to its original condition prior to our improvements. Based on these matters, we had a $1,117 reserve for lease related costs and for legal and professional fees and other costs to remove improvements previously made to the facility. During the first six months of fiscal 2019, the Company released portions of the reserve for lease related liabilities that were no longer owed due to the statute of limitations. For the three and six months ended March 31, 2019, general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income were reduced by $55 and $546, respectively for the liability reduction. At March 31, 2019 and September 30, 2018, respectively, we had $503 and $1,117 reserved for the remaining liability. The reserve is classified as a current liability on the Condensed Consolidated Balance Sheets.

XML

BUSINESS COMBINATIONS

6 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

BUSINESS COMBINATIONS

9. BUSINESS COMBINATIONS

Overview

On July 2, 2018, the Company, through its wholly-owned subsidiary Seventh Wave Laboratories, LLC (f/k/a Cardinal Laboratories LLC) (the “Seventh Wave Purchaser”), acquired (the “Seventh Wave Acquisition”) substantially all of the assets of SW Chrysalis, LLC (f/k/a Seventh Wave Laboratories LLC) (the “Seventh Wave Seller”), a consulting-based contract research laboratory located in Maryland Heights, Missouri providing integrated services for discovery and preclinical drug development, under the terms and conditions of an Asset Purchase Agreement, dated July 2, 2018, among the Seventh Wave Purchaser, the Company, the Seventh Wave Seller and certain members of the Seventh Wave Seller. The total consideration for the Seventh Wave Acquisition was approximately $9,234, which consisted of $6,759 in cash, including an indemnity escrow of $750, and 1,500,000 of the Company’s common shares valued at $2,475, using the closing price of the Company’s common shares on June 29, 2018. The Seventh Wave Purchaser is operated as a wholly-owned subsidiary of the Company. The Company funded the cash portion of the purchase price for the Seventh Wave Acquisition with cash on hand and the net proceeds from the refinancing of its credit arrangements with FIB, as described in Note 7.

Pro Forma Results

The Company’s unaudited pro forma results of operations for the three and six months ended March 31, 2018 assuming the Seventh Wave Acquisition had occurred as of October 1, 2017 are presented for comparative purposes below. These amounts are based on available information of the results of operations of the Seventh Wave Seller’s operations prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the Seventh Wave Acquisition been completed on October 1, 2017.

The unaudited pro forma information is as follows:

	Three Months Ended			Six Months Ended
	March 31, 2018			March 31, 2018
Total revenues	$	8,946		$	18,065
Net income		(174	)		75
Pro forma basic net income (loss) per share	$	(0.02	)	$	0.01
Pro forma diluted net income (loss) per share	$	(0.02	)	$	0.01

XML

NEW ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Mar. 31, 2019

Accounting Changes and Error Corrections [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

10. NEW ACCOUNTING PRONOUNCEMENTS

On October 1, 2018, the Company adopted Accounting Standard Codification, or ASC Topic 606, “Revenue from Contracts with Customers,” (Topic 606), using the modified retrospective method for all contracts that were not completed as of October 1, 2018. Comparative prior period information continues to be reported under the accounting standards in effect for the period presented. Topic 606 superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance requires the Company to apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation.

The cumulative effect of initially applying the new revenue standard was $(76) and has been recorded as an adjustment to the opening balance of retained earnings. The cumulative adjustment relates primarily to the recognition of revenue for free archive storage offered to customers. Gross sales and deferred revenue of $(76), respectively, were recorded as part of the cumulative effect adjustment. The comparative information has not been restated and it is reported in accordance with accounting standard Topic 605, which was in effect for those periods.

On October 1, 2018 the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230), which addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017. The adoption of this guidance had no material impact on our consolidated financial statements.

In February 2016, the FASB issued updated guidance on leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. The amendments are to be applied prospectively to business combinations that occur after the effective date. The Company is progressing with its preparation for the adoption and implementation of this new accounting standard and related changes in internal controls and will adopt the standard in the first quarter of fiscal 2020.

XML

REVENUE RECOGNITION

6 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

11. REVENUE RECOGNITION

In accordance with ASC 606, the Company disaggregates its revenue from customers into two revenue streams, service revenue and product revenue. At contract inception the Company assesses the services promised in the contract with the customers to identify performance obligations in the arrangements.

Service revenue

The Company enters into contracts with customers to provide drug discovery and development services with payments based on mainly fixed-fee arrangements. The Company also offers free archive storage services on certain contracts. Customers can also enter into separate archive storage contracts after the expiration of the free storage period.

The Company’s drug discovery and development services contracts that include a free storage period are considered a single performance obligation because the company provides a highly integrated service. The inclusion of free storage fee in the measurement of progress under the discovery and development service contracts creates a timing difference between the amounts the company is entitled to receive in reimbursement of cost incurred and amount of revenue recognized on such costs, which is recognized as deferred revenue and classified as customer advances on the condensed consolidated balance sheet.

The Company’s fixed fee arrangements may involve bioanalytical and pharmaceutical method development and validation, nonclinical research services and the analysis of bioanalytical and pharmaceutical samples. For bioanalytical and pharmaceutical method validation services and nonclinical research services, revenue is recognized over time using the input method based on the ratio of direct costs incurred to total estimated direct costs. For contracts that involve method development or the analysis of bioanalytical and pharmaceutical samples, revenue is recognized over time when samples are analyzed or when services are performed. The Company generally bills for services on a milestone basis. These contracts represent a single performance obligation and due to the Company’s right to payment for work performed, revenue is recognized over time. Research services contract fees received upon acceptance are deferred until earned, and classified within customer advances on the condensed consolidated balance sheet. Unbilled revenues represent revenues earned under contracts in advance of billings.

Archive services provide climate controlled archiving for client’s data and samples. The archive revenue is recognized over time, generally when the service is provided. These arrangements typically include only one performance obligation. Amounts related to future archiving or prepaid archiving contracts for customers where archiving fees are billed in advance are accounted for as deferred revenue and recognized ratably over the period the applicable archive service is performed.

Product revenue

The Company’s products can be sold to multiple customers and have alternative use. Both the transaction sales price and shipping terms are agreed upon in the customer order. For these products, all revenue is recognized at a point in time, generally when title of the product and risk of loss is transferred to the customer based upon shipping terms. These arrangements typically include only one performance obligation. Certain products have maintenance agreements available for customers to purchase. These are typically billed in advance and are accounted for as deferred revenue and recognized ratably over the applicable maintenance period.

The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the three months ended March 31, 2019 is as follows:

Statements of Operations and Comprehensive (Loss) Income

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Service revenue	$	8,131		$	(25	)	$	8,156
Product revenue		1,213						1,213
Total revenue		9,344			(25	)		9,369
Total cost of revenue		6,783						6,783
Gross profit		2,561			(25	)		2,586
Operating loss		(449	)		(25	)		(424	)
Net loss before income taxes		(568	)		(25	)		(543	)
Income taxes expense		1						1
Net loss	$	(569	)	$	(25	)	$	(544	)
Diluted net loss per share	$	(0.06	)	$	(0.00	)	$	(0.06	)

Balance Sheet

	As Reported			Effect of  Change  Higher/(Lower)			Amount Without Adoption of ASC  606
Current Liabilities:
Customer advances	$	5,583		$	(95	)	$	5,489
Shareholder’s equity:
Accumulated deficit	$	(16,961	)	$	95		$	(16,867	)

The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the six months ended March 31, 2019 is as follows:

Statements of Operations and Comprehensive (Loss) Income

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Service revenue	$	15,866		$	(19	)	$	15,885
Product revenue		2,103						2,103
Total revenue		17,969			(19	)		17,988
Total cost of revenue		12,989						12,989
Gross profit		4,980			(19	)		4,999
Operating loss		(408	)		(19	)		(389	)
Net loss before income taxes		(652	)		(19	)		(633	)
Income taxes expense		2						2
Net loss	$	(654	)	$	(19	)	$	(635	)
Diluted net loss per share	$	(0.06	)	$	(0.00	)	$	(0.06	)

Balance Sheet

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Current Liabilities:
Customer advances	$	5,583		$	(95	)	$	5,489
Shareholder’s equity:
Accumulated deficit	$	(16,961	)	$	95		$	(16,867	)

XML

SUBSEQUENT EVENTS

6 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS

Acquisition

On May 1, 2019, the Company, through its wholly-owned subsidiary Oriole Toxicology Services LLC (the “ Smithers Avanza Purchaser”), acquired (the “Smithers Avanza Acquisition”) from Smithers Avanza Toxicology Services LLC (the “Smithers Avanza Seller”), a consulting-based contract research laboratory located in Gaithersburg, Maryland, substantially all of the assets used by the Smithers Avanza Seller in connection with the performance of in-vivo mammalian toxicology CRO services for pharmaceuticals (small molecules and biologics), vaccines, agro and industrial chemicals, under the terms and conditions of an Asset Purchase Agreement, dated May 1, 2019, among the Smithers Avanza Purchaser, the Company, the Smithers Avanza Seller and the member of the Smithers Avanza Seller (the “Smithers Avanza Purchase Agreement”). The consideration for the Acquisition consisted of $1,271 in cash, subject to certain adjustments and an indemnity escrow of $125, 200 of the Company’s common shares and an unsecured promissory note in the initial principal amount of $810 made by the Smithers Avanza Purchaser and guaranteed by the Company. The Company funded the cash portion of the purchase price for the Acquisition with cash on hand and the net proceeds from the refinancing of its credit arrangements with FIB, as described below.

The Smithers Avanza Purchase Agreement contains customary representations, warranties, covenants (including non-competition requirements applicable to the selling parties for a 5-year period) and indemnification provisions. As contemplated by the Smithers Avanza Purchase Agreement, on May 1, 2019 the Smithers Avanza Purchaser assumed amended lease arrangements for certain premises in Gaithersburg, Maryland (the “Lease Arrangements”). Under the Lease Arrangements, the Smithers Avanza Purchaser agreed to lease the premises for a term of 5 years and 8 months, with two 5 year extensions at the Smithers Avanza Purchaser’s option. Annual minimum rental payments under the initial term of the Lease Arrangements range from $400 to $800, provided that the Lease Arrangements provide the Smithers Avanza Purchaser with the option to purchase the premises. The Lease Arrangements include customary rights upon a default by landlord or tenant.

Amendment to Credit Arrangements

In connection with the Second Acquisition, on May 1, 2019 the Company and FIB entered into a fourth amendment (the “Fourth Amendment”) to the Credit Agreement by and between the parties dated June 23, 2017, as previously amended July 2, 2018, September 6, 2018 and September 28, 2018 (as amended, the “Credit Agreement”) to (i) extend the term of the Company’s $3,500 revolving credit facility to June 30, 2020, (ii) provide the Company with an additional term loan (the “New Term Loan”) in the amount of $1,271, the proceeds of which were used to fund the cash consideration for the Acquisition, and (iii) provide for an additional line of credit in the principal amount of $1,100 (the “Capex Line”), which the Company may borrow from time to time, subject to the terms of the Credit Agreement. The New Term Loan and the Capex Line mature November 1, 2025 and June 30, 2020, respectively.

Amounts outstanding under the New Term Loan bear interest at a fixed per annum rate of 4.63%, while interest accrues on the principal balance of the Capex Line at a floating per annum rate equal to the sum of the Prime Rate plus Fifty Basis Points (0.5%), which rate shall change concurrently with the Prime Rate. Commencing June 1, 2019, the New Term Loan requires monthly interest only payments until December 1, 2019, from which time payments of principal and interest in monthly installments of $20 become due, with all accrued but unpaid interest, cost and expenses due and payable at the maturity date. The Company is required to pay accrued but unpaid interest on the Capex Line on a monthly basis commencing on June 1, 2019, until June 30, 2020, at which time the entire balance of the Capex Line, together with accrued but unpaid interest, costs and expenses, shall be due and payable in full.

Following its amendment, the Company’s obligations under the Credit Agreement are guaranteed by BAS Evansville, Inc. (“BASEV”), Seventh Wave Laboratories, LLC (“Seventh Wave”), as well as the Smithers Avanza Purchaser, each a wholly owned subsidiary of the Company. The Company’s obligations under the Credit Agreement and BASEV’s, Seventh Wave’s and the Smithers Avanza Purchaser’s obligations under their respective Guaranties are secured by first priority security interests in substantially all of the assets of the Company, BASEV, Seventh Wave and the Smithers Avanza Purchaser respectively, as well as mortgages on the Company’s and BASEV’s facilities in West Lafayette, Indiana and Evansville, Indiana, respectively, and pledges of the Company’s ownership interests in its subsidiaries.

The various restrictive covenants under the Credit Agreement remain consistent, provided that the parties agreed (i) to modify the computation of the minimum debt service coverage ratio and lower the ratio itself during certain periods to 1.15 to 1.0 or 1.20 to 1.0 to appropriately reflect relevant aspects of the Smithers Avanza Acquisition and (ii) to suspend application of the cash flow coverage ratio through the fiscal quarter ending December 31, 2019, with the ratio of the Company’s total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended as of March 31, 2020 and June 30, 2020 not to exceed 5.00 to 1.00 and 4.50 to 1.00, respectively. The Company also agreed to obtain a life insurance policy in an amount not less than $2,000 for its President and Chief Executive Officer and to provide FIB an assignment of such life insurance policy as collateral.

XML

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

A summary of our stock option activity for the six months ended March 31, 2019 is as follows (in thousands except for share prices):

	Options (shares)			Weighted- Average Exercise Price		Weighted- Average Grant Date Fair Value
Outstanding – September 30, 2018		301		$	1.73	$	1.38
Exercised		(1	)	$	1.40	$	1.15
Granted		403		$	1.41	$	1.04
Forfeited		(4	)	$	1.74	$	1.38
Outstanding - March 31, 2019		699		$	1.55	$	1.18

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The weighted-average assumptions used to compute the fair value of the options granted in the six months ended March 31, 2019 were as follows:

Risk-free interest rate	2.58	%
Dividend yield	0.00	%
Volatility of the expected market price of the Company's common shares	72.0%-72.5	%
Expected life of the options (years)	8.0

Schedule of Restricted Share, Stock Options, Activity

A summary of our restricted share activity for the six months ended March 31, 2019 is as follows:

	Restricted Shares
Outstanding – September 30, 2018		-
Granted		45
Vested		(35	)
Forfeited		-
Outstanding - March 31, 2019		10

XML

INCOME (LOSS) PER SHARE (Tables)

6 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table reconciles our computation of basic income per share to diluted income per share:

	Three Months Ended March 31,					Six Months Ended March 31,
	2019			2018		2019			2018
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$	(569	)	$	55	$	(654	)	$	81
Weighted average common shares outstanding		10,290			8,245		10,268			8,245
Basic net income (loss) per share	$	(0.06	)	$	0.01	$	(0.06	)	$	0.01
Diluted net income per share:
Diluted net income (loss) applicable to common shareholders	$	(569	)	$	55	$	(654	)	$	81
Weighted average common shares outstanding		10,290			8,245		10,268			8,245
Plus: Incremental shares from assumed conversions:
Series A preferred shares		-			518		-			518
Dilutive stock options/shares		-			26		-			30
Diluted weighted average common shares outstanding		10,290			8,789		10,268			8,793
Diluted net income (loss) per share	$	(0.06	)	$	0.01	$	(0.06	)	$	0.01

XML

INVENTORIES (Tables)

6 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventories consisted of the following:

	March 31, 2019			September 30, 2018
Raw materials	$	841		$	939
Work in progress		191			89
Finished goods		264			342
	$	1,296		$	1,370
Obsolescence reserve		(193	)		(188	)
	$	1,103		$	1,182

XML

SEGMENT INFORMATION (Tables)

6 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of Operating Segments

	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Revenue:
Service	$	8,131		$	5,030		$	15,866		$	9,555
Product		1,213			914			2,103			1,766
	$	9,344		$	5,944		$	17,969		$	11,321
Operating Income (Loss)
Service	$	877		$	918		$	1,513		$	1,699
Product		30			52			(50	))		84
Corporate		(1,355	)		(861	)		(1,870	)		(1,662	)
	$	(449	)	$	110		$	(408	)	$	121
Interest expense		(122	)		(48	)		(248	)		(100	)
Other income		3			4			4			4
Income (loss) before income taxes	$	(568	)	$	66		$	(652	)	$	25

XML

DEBT (Tables)

6 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Long term debt is detailed in the table below.

	As of:
	March 31, 2019			September 30, 2018
Initial term loan	$	4,106		$	4,222
Subsequent term loan		5,057			5,392
Construction loans		1,193			-
		10,356			9,614
Less: Current portion		(930	)		(909	)
Less: Debt issue costs not amortized		(161	)		(159	)
Total Long-term debt	$	9,265		$	8,546

XML

BUSINESS COMBINATIONS (Tables)

6 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Business Acquisition, Pro Forma Information

The unaudited pro forma information is as follows:

	Three Months Ended			Six Months Ended
	March 31, 2018			March 31, 2018
Total revenues	$	8,946		$	18,065
Net income		(174	)		75
Pro forma basic net income (loss) per share	$	(0.02	)	$	0.01
Pro forma diluted net income (loss) per share	$	(0.02	)	$	0.01

XML

REVENUE RECOGNITION (Tables)

6 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Schedule Of The New Revenue, Standard Impacted The Consolidated Financial Statements

The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the three months ended March 31, 2019 is as follows:

Statements of Operations and Comprehensive (Loss) Income

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Service revenue	$	8,131		$	(25	)	$	8,156
Product revenue		1,213						1,213
Total revenue		9,344			(25	)		9,369
Total cost of revenue		6,783						6,783
Gross profit		2,561			(25	)		2,586
Operating loss		(449	)		(25	)		(424	)
Net loss before income taxes		(568	)		(25	)		(543	)
Income taxes expense		1						1
Net loss	$	(569	)	$	(25	)	$	(544	)
Diluted net loss per share	$	(0.06	)	$	(0.00	)	$	(0.06	)

Balance Sheet

	As Reported			Effect of  Change  Higher/(Lower)			Amount Without Adoption of ASC  606
Current Liabilities:
Customer advances	$	5,583		$	(95	)	$	5,489
Shareholder’s equity:
Accumulated deficit	$	(16,961	)	$	95		$	(16,867	)

The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the six months ended March 31, 2019 is as follows:

Statements of Operations and Comprehensive (Loss) Income

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Service revenue	$	15,866		$	(19	)	$	15,885
Product revenue		2,103						2,103
Total revenue		17,969			(19	)		17,988
Total cost of revenue		12,989						12,989
Gross profit		4,980			(19	)		4,999
Operating loss		(408	)		(19	)		(389	)
Net loss before income taxes		(652	)		(19	)		(633	)
Income taxes expense		2						2
Net loss	$	(654	)	$	(19	)	$	(635	)
Diluted net loss per share	$	(0.06	)	$	(0.00	)	$	(0.06	)

Balance Sheet

	As Reported			Effect of Change Higher/(Lower)			Amount Without Adoption of ASC 606
Current Liabilities:
Customer advances	$	5,583		$	(95	)	$	5,489
Shareholder’s equity:
Accumulated deficit	$	(16,961	)	$	95		$	(16,867	)

XML

STOCK-BASED COMPENSATION (Details) - Employee Stock Option [Member] shares in Thousands	6 Months Ended
	Mar. 31, 2019 $ / shares shares
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Options (shares) Outstanding | shares	301
Options (shares) Exercised | shares	(1)
Options (shares) Granted | shares	403
Options (shares) Forfeited | shares	(4)
Options (shares) Outstanding | shares	699
Weighted-Average Exercise Price Outstanding	$ 1.73
Weighted-Average Exercise Price Exercised	1.40
Weighted-Average Exercise Price Granted	1.41
Weighted-Average Exercise Price Forfeited	1.74
Weighted-Average Exercise Price Outstanding	1.55
Weighted-Average Grant Date Fair Value Outstanding	1.38
Weighted-Average Grant Date Fair Value Exercised	1.15
Weighted-Average Grant Date Fair Value Granted	1.04
Weighted-Average Grant Date Fair Value Forfeited	1.38
Weighted-Average Grant Date Fair Value Outstanding	$ 1.18

XML

STOCK-BASED COMPENSATION (Details 1)	6 Months Ended
	Mar. 31, 2019
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility of the expected market price of the Company's common shares	72.50%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility of the expected market price of the Company's common shares	72.00%
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.58%
Dividend yield	0.00%
Expected life of the options (years)	8 years

XML

STOCK-BASED COMPENSATION (Details 2) - Restricted Stock [Member] shares in Thousands	6 Months Ended
	Mar. 31, 2019 shares
Outstanding – September 30, 2018	0
Granted	45
Vested	(35)
Forfeited	0
Outstanding - March 31, 2019	10

XML

STOCK-BASED COMPENSATION (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
2018 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	700		700
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 500		$ 500
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			1 year 7 months 6 days
Allocated Share-based Compensation Expense	99	$ 34	$ 124	$ 68
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 12		12
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 9 months 14 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value	$ 44		$ 44

XML

INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$ (569)	$ 55	$ (654)	$ 81
Weighted average common shares outstanding	10,290	8,245	10,268	8,245
Basic net income (loss) per share	$ (0.06)	$ 0.01	$ (0.06)	$ 0.01
Diluted net income per share:
Diluted net income (loss) applicable to common shareholders	$ (569)	$ 55	$ (654)	$ 81
Weighted average common shares outstanding	10,290	8,245	10,268	8,245
Plus: Incremental shares from assumed conversions:
Series A preferred shares	0	518	0	518
Dilutive stock options/shares	0	26	0	30
Diluted weighted average common shares outstanding	10,290	8,789	10,268	8,793
Diluted net income (loss) per share	$ (0.06)	$ 0.01	$ (0.06)	$ 0.01

XML

INCOME (LOSS) PER SHARE (Details Textual) - shares	3 Months Ended	6 Months Ended
	Mar. 31, 2019	Mar. 31, 2019
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	699	699
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	17	17

XML

INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Sep. 30, 2018
Inventory [Line Items]
Raw materials	$ 841	$ 939
Work in progress	191	89
Finished goods	264	342
Gross inventories	1,296	1,370
Obsolescence reserve	(193)	(188)
Inventories	$ 1,103	$ 1,182

XML

SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Revenue	$ 9,344	$ 5,944	$ 17,969	$ 11,321
Operating Income (Loss)	(449)	110	(408)	121
Interest expense	(122)	(48)	(248)	(100)
Other income	3	4	4	4
Income (loss) before income taxes	(568)	66	(652)	25
Service Segment [Member]
Segment Reporting Information [Line Items]
Revenue	8,131	5,030	15,866	9,555
Operating Income (Loss)	877	918	1,513	1,699
Product Segment [Member]
Segment Reporting Information [Line Items]
Revenue	1,213	914	2,103	1,766
Operating Income (Loss)	30	52	(50)	84
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Operating Income (Loss)	$ (1,355)	$ (861)	$ (1,870)	$ (1,662)

XML

DEBT (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Long-term Debt	$ 10,356	$ 9,614
Less: Current portion	930	909
Less: Debt issue costs not amortized	(161)	(159)
Total Long-term debt	9,265	8,546
Construction Draw Loan [Member]
Debt Instrument [Line Items]
Long-term Debt	1,193	0
Credit Facility Term Loan One [Member]
Debt Instrument [Line Items]
Long-term Debt	4,106	4,222
Credit Facility Term Loan Two [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 5,057	$ 5,392

XML

DEBT (Details Textual) - USD ($) $ in Thousands	1 Months Ended		6 Months Ended
	Sep. 28, 2018	Jul. 02, 2018	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment			$ 33
Long-term Debt			10,356		$ 9,614
Business Combination, Contingent Consideration Arrangements, Description	As of March 31, 2019, the Credit Agreement also required us to maintain (i) a minimum debt service coverage ratio of not less than 1.25 to 1.0 and (ii) a cash flow coverage ratio whereby, the ratio of the Company's total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended on such date may not exceed 4.50 to 1.00.
Equipment Draw Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Maturity Date	Mar. 28, 2025
Long-term Debt			1,193
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,429
Construction Draw Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Maturity Date	Mar. 28, 2025
Long-term Debt			1,193		0
Line of Credit Facility, Maximum Borrowing Capacity	$ 4,445
First Internet Bank of Indiana [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment			$ 33
Debt Instrument, Interest Rate, Stated Percentage			3.99%
Debt Instrument, Face Amount			$ 4,500
Long-term Debt, Gross			4,106
First Internet Bank of Indiana [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 3,500
Debt Instrument, Description of Variable Rate Basis			less Twenty-five (25) Basis Points (0.25%).
Long-term Line of Credit			$ 409		$ 0
Subsequent Term Loan [Member] | First Internet Bank of Indiana [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment		$ 78
Debt Instrument, Interest Rate, Stated Percentage		5.06%
Debt Instrument, Face Amount		$ 5,500
Debt Instrument, Maturity Date		Jul. 02, 2023
Long-term Debt			$ 5,057
Current Credit Agreement [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				5.20%

XML

ACCRUED EXPENSES (Details Textual) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2019	Mar. 31, 2019	Sep. 30, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Current	$ 503	$ 503	$ 1,117
General and Administrative Expense [Member]
Restructuring Cost and Reserve [Line Items]
Increase (Decrease) in Accrued Liabilities and Other Operating Liabilities	55	546
Lease Related Costs
Restructuring Cost and Reserve [Line Items]
Restructuring reserves	$ 1,117	$ 1,117

XML

NEW ACCOUNTING PRONOUNCEMENTS (Details Textual) $ in Thousands	3 Months Ended
	Dec. 31, 2018 USD ($)
Accounting Changes and Error Corrections [Abstract]
Cumulative Effect on Retained Earnings, Net of Tax	$ (76)

XML

BUSINESS COMBINATIONS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2018	Mar. 31, 2018
Total revenues	$ 8,946	$ 18,065
Net income	$ (174)	$ 75
Pro forma basic net income (loss) per share	$ (0.02)	$ 0.01
Pro forma diluted net income (loss) per share	$ (0.02)	$ 0.01

XML

BUSINESS COMBINATIONS (Details Textual) - USD ($)	1 Months Ended
	Jul. 02, 2018	Mar. 31, 2019	Sep. 30, 2018	Jun. 29, 2018
Business Combination, Contingent Consideration, Asset	$ 9,234
Business Combination, Consideration Transferred	6,759
Escrow Deposit Disbursements Related to Property Acquisition	$ 750
Common Stock, Shares, Issued	1,500,000	10,290,531	10,245,277
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned				$ 2,475

XML

REVENUE RECOGNITION (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2019	Mar. 31, 2018
Total revenue	$ 9,344		$ 5,944		$ 17,969	$ 11,321
Total cost of revenue	6,783		4,204		12,989	8,000
Gross profit	2,561		1,740		4,980	3,321
Operating income	(449)		110		(408)	121
Net loss before income taxes	(568)		66		(652)	25
Income taxes expense	1		11		2	(56)
Net loss	$ (569)	$ (85)	$ 55	$ 26	$ (654)	$ 81
Diluted net loss per share	$ (0.06)		$ 0.01		$ (0.06)	$ 0.01
Product [Member]
Total revenue	$ 1,213		$ 914		$ 2,103	$ 1,766
Total cost of revenue	832		542		1,441	1,065
Service [Member]
Total revenue	8,131		5,030		15,866	9,555
Total cost of revenue	5,951		$ 3,662		11,548	$ 6,935
Previously Reported [Member]
Total revenue	9,369				17,988
Total cost of revenue	6,783				12,989
Gross profit	2,586				4,999
Operating income	(424)				(389)
Net loss before income taxes	(543)				(633)
Income taxes expense	1				2
Net loss	$ (544)				$ (635)
Diluted net loss per share	$ (0.06)				$ (0.06)
Previously Reported [Member] | Product [Member]
Total revenue	$ 1,213				$ 2,103
Previously Reported [Member] | Service [Member]
Total revenue	8,156				15,885
New Accounting Pronouncement, Early Adoption, Effect [Member]
Total revenue	(25)				(19)
Gross profit	(25)				(19)
Operating income	(25)				(19)
Net loss before income taxes	(25)				(19)
Net loss	$ (25)				$ (19)
Diluted net loss per share	$ 0.00				$ 0.00
New Accounting Pronouncement, Early Adoption, Effect [Member] | Service [Member]
Total revenue	$ (25)				$ (19)

XML

REVENUE RECOGNITION (Detail 1) - USD ($) $ in Thousands	Mar. 31, 2019	Sep. 30, 2018
Current Liabilities:
Customer advances	$ 5,583	$ 4,925
Shareholder's equity:
Retained earnings	(16,961)	$ (16,231)
Previously Reported [Member]
Current Liabilities:
Customer advances	5,489
Shareholder's equity:
Retained earnings	(16,867)
New Accounting Pronouncement, Early Adoption, Effect [Member]
Current Liabilities:
Customer advances	(95)
Shareholder's equity:
Retained earnings	$ 95

XML

SUBSEQUENT EVENTS (Details Textual) - USD ($)	1 Months Ended		6 Months Ended
	May 01, 2019	Jul. 02, 2018	Mar. 31, 2019	Sep. 30, 2018
Debt Instrument, Periodic Payment			$ 33,000
Debt Instrument, Frequency of Periodic Payment			Commencing June 1, 2019, the New Term Loan requires monthly interest only payments until December 1, 2019, from which time payments of principal and interest in monthly installments of $20 become due, with all accrued but unpaid interest, cost and expenses due and payable at the maturity date.
Long-term Debt			$ 10,356,000	$ 9,614,000
Debt Instrument, Covenant Description		The various restrictive covenants under the Credit Agreement remain consistent, provided that the parties agreed (i) to modify the computation of the minimum debt service coverage ratio and lower the ratio itself during certain periods to 1.15 to 1.0 or 1.20 to 1.0 to appropriately reflect relevant aspects of the Smithers Avanza Acquisition and (ii) to suspend application of the cash flow coverage ratio through the fiscal quarter ending December 31, 2019, with the ratio of the Company's total funded debt (as defined in the Credit Agreement) as of the last day of each fiscal quarter to its EBITDA (as defined in the Credit Agreement) for the 12 months ended as of March 31, 2020 and June 30, 2020 not to exceed 5.00 to 1.00 and 4.50 to 1.00, respectively.
First Internet Bank of Indiana [Member]
Debt Instrument, Interest Rate, Stated Percentage			3.99%
Line of Credit Facility, Interest Rate Description		interest accrues on the principal balance of the Capex Line at a floating per annum rate equal to the sum of the Prime Rate plus Fifty Basis Points (0.5%), which rate shall change concurrently with the Prime Rate.
Debt Instrument, Periodic Payment			$ 33,000
Subsequent Event [Member] | Extended Maturity [Member] | Property, Plant and Equipment [Member]
Long-term Debt, Maturity Date	Jun. 30, 2020
Subsequent Event [Member] | Credit Agreement [Member]
Long-term Debt, Maturity Date	Jun. 30, 2020
Long-term Debt	$ 3,500
Subsequent Event [Member] | New Term Loan [Member]
Long-term Debt	$ 1,271
Subsequent Event [Member] | CapexLine [Member]
Debt Instrument, Interest Rate, Stated Percentage	4.63%
Debt Instrument, Periodic Payment	$ 20
Line Of Credit	$ 1,100
Debt Instrument, Description of Variable Rate Basis	Prime Rate plus Fifty Basis Points (0.5%)
Debt Instrument, Basis Spread on Variable Rate	0.50%
Bank Owned Life Insurance On Loan	$ 2,000
Subsequent Event [Member] | Smithers Avanza Acquisition [Member]
Payments to Acquire Businesses, Gross	$ 1,271
Description of Lessee Leasing Arrangements, Operating Leases	the Smithers Avanza Purchaser agreed to lease the premises for a term of 5 years and 8 months, with two 5 year extensions at the Smithers Avanza Purchaser's option.
Subsequent Event [Member] | Smithers Avanza Acquisition [Member] | Unsecured Debt [Member]
Business Combination, Consideration Transferred, Other	$ 810
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	125,200
Subsequent Event [Member] | Smithers Avanza Acquisition [Member] | Maximum [Member] | Lease Arrangements [Member]
Operating Leases, Income Statement, Minimum Lease Revenue	800
Subsequent Event [Member] | Smithers Avanza Acquisition [Member] | Minimum [Member] | Lease Arrangements [Member]
Operating Leases, Income Statement, Minimum Lease Revenue	$ 400