8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 1, 2019

BIOANALYTICAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Indiana	0-23357	35-1345024
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

2701 KENT AVENUE WEST LAFAYETTE, INDIANA	47906-1382
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (765) 463-4527

N/A

(Former Name or Former Address, if Changed Since Last Report)

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

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act(17CFR240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17CFR240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company                  ¨

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. ¨

EXPLANATORY NOTE

On May 7, 2019 Bioanalytical Systems, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”) to, among other things, report that on May 1, 2019 the Company, through its wholly-owned subsidiary BASi Gaithersburg LLC, f/k/a Oriole Toxicology Services LLC (the “Purchaser”), acquired (the “Acquisition”) substantially all of the assets of Smithers Avanza Toxicology Services LLC (the “Seller”), under the terms and conditions of an Asset Purchase Agreement, dated May 1, 2019, among the Purchaser, the Company, the Seller and the member of the Seller.

This Amendment No.1 to the Initial Form 8-K (“Amendment No. 1”) amends and supplements Item 9.01 of the Initial Form 8-K to provide certain historical financial statements for the Seller and certain pro forma financial information in connection with the Acquisition. Any information required to be set forth in the Initial Form 8-K which is not being amended or supplemented pursuant to this Amendment No. 1 is hereby incorporated by reference. Except as set forth herein, no modifications have been made to the information contained in the Initial Form 8-K and the Company has not updated any information contained therein to reflect the events that have occurred since the date of the Initial Form 8-K. Accordingly, this Amendment No. 1 should be read in conjunction with the Initial Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

1. The financial statements of Smithers Avanza Toxicology Services LLC as of and for each of the fiscal years ended December 31, 2017 and 2018, together with the notes thereto and the report of the independent auditor thereon, are filed as Exhibit 99.2 to this Amendment No. 1 to Current Report on Form 8-K/A and are incorporated herein by reference.

(b) Pro Forma Financial Information.

1. Unaudited pro forma condensed combined balance sheet as of December 31, 2018 and unaudited statements of operations for the three months ended December 31, 2018 and for the year ended September 30, 2018, each giving effect to the Acquisition and related financing, and the notes thereto, are filed as Exhibit 99.3 to this Amendment No. 1 to Current Report on Form 8-K/A and are incorporated herein by reference. They were prepared for informational and illustrative purposes in accordance with Rule 8-05 of Regulation S-X. Such information is preliminary and based on currently available information and assumptions that the Company believes are reasonable but may be subject to change. They shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as set forth by specific reference in such filing.

(c) None.

(d) Exhibits

The following exhibits are being filed as part of this report:

Exhibit No.	Description
23.1	Consent of Mayer Hoffman McCann P.C., independent auditor to Smithers Avanza Toxicology Services LLC.
99.1	Press release dated May 1, 2019 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 7, 2019).
99.2	Audited financial statements of Smithers Avanza Toxicology Services LLC as of and for each of the fiscal years ended December 31, 2018 and 2017, together with the notes thereto and the report of the independent auditor thereon.
99.3	Unaudited pro forma condensed consolidated balance sheet as of December 31, 2018 and unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three months ended December 31, 2018 and for the year ended September 30, 2018, each giving effect to the acquisition of Smithers Avanza Toxicology Services LLC and related financing, and the notes thereto.

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 hereunto duly authorized.

		Bioanalytical Systems, Inc.
		By:	/s/ Jill Blumhoff
Date:	July 15, 2019		Jill Blumhoff
			Chief Financial Officer Vice President - Finance

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in Registration Statement (No. 333-153734) on Form S-8 of Bioanalytical Systems, Inc. of our report dated June 28, 2019, relating to the financial statements of Smithers Avanza Toxicology Services LLC, as of and for the years ended December 31, 2018 and 2017, which appears in the Form 8-K/A of Bioanalytical Systems, Inc. dated July 15, 2019.

/s/ Mayer Hoffman McCann P.C.

July 15, 2019

EX-99.2

Exhibit 99.2

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

FINANCIAL STATEMENTS

as of December 31, 2018 and 2017

and for the years then ended

CONTENTS	PAGES
Independent Auditors’ Report	1-2
Financial Statements:
Balance Sheets	3
Statements of Operations	4
Statements of Changes in Members’ Deficit	5
Statements of Cash Flows	6
Notes to Financial Statements	7-13

INDEPENDENT AUDITORS’ REPORT

To the Members

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

We have audited the accompanying financial statements of Smithers Avanza Toxicology Services LLC, which comprise the balance sheets as of December 31, 2018 and 2017, and the related statements of operations, changes in members’ deficit, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

1

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Smithers Avanza Toxicology Services LLC as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Mayer Hoffman McCann P.C.

Akron, Ohio

June 28, 2019

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SMITHERS AVANZA TOXICOLOGY SERVICES LLC

BALANCE SHEETS

DECEMBER 31, 2018 AND 2017

	2018			2017
ASSETS
Current assets
Accounts receivable, net of allowance for doubtful accounts ($14,000 - 2018; $0 - 2017)	$	704,826		$	1,305,043
Related party accounts receivable		108,205			102,166
Prepaid expenses and other current assets		74,652			111,058
Unbilled costs and earned revenues		471,442			432,822
Total current assets		1,359,125			1,951,089
Property and equipment, net of accumulated depreciation and amortization		1,157,284			1,118,676
Total assets	$	2,516,409		$	3,069,765
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities
Accounts payable	$	358,203		$	537,239
Related party accounts payable		78,263			37,900
Accrued expenses		406,921			564,148
Deferred income / prebilled development		554,046			816,997
Total current liabilities		1,397,433			1,956,284
Long-term liabilities
Accrued rent		531,342			535,962
Due to member		8,830,469			7,252,503
Total long-term liabilities		9,361,811			7,788,465
Total liabilities		10,759,244			9,744,749
Members' deficit
Class A		(8,242,835	)		(6,674,984	)
Class B		-			-
Total members' deficit		(8,242,835	)		(6,674,984	)
Total liabilities and members' deficit	$	2,516,409		$	3,069,765

See Notes to Financial Statements

3

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

	2018			2017
Net sales	$	7,474,620		$	7,621,825
Cost of sales		6,998,200			7,323,910
Gross profit		476,420			297,915
Selling, general, and administrative expenses		2,044,271			2,002,827
Net loss	$	(1,567,851	)	$	(1,704,912	)

See Notes to Financial Statements

4

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

STATEMENTS OF CHANGES IN MEMBERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

						Total
						Members'
	Class A			Class B		Deficit
Balance, December 31, 2016	$	(4,970,072	)	$	-	$	(4,970,072	)
Net loss		(1,704,912	)		-		(1,704,912	)
Balance, December 31, 2017	$	(6,674,984	)	$	-	$	(6,674,984	)
Net loss		(1,567,851	)		-		(1,567,851	)
Balance, December 31, 2018	$	(8,242,835	)	$	-	$	(8,242,835	)

See Notes to Financial Statements

5

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

	2018			2017
Cash flows from operating activities:
Net loss	$	(1,567,851	)	$	(1,704,912	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization		323,525			560,053
Bad debt expense		14,285			-
(Increase) decrease in operating assets:
Accounts receivable, net		585,932			(961,779	)
Related party accounts receivable		(6,039	)		25,202
Prepaid expenses and other current assets		36,406			(20,281	)
Unbilled costs and earned revenues		(38,620	)		(26,147	)
Increase (decrease) in operating liabilities:
Accounts payable		(179,036	)		315,041
Related party accounts payable		40,363			(17,562	)
Accrued expenses		(157,227	)		142,005
Deferred income / prebilled development		(262,951	)		466,582
Accrued rent		(4,620	)		88,004
Total adjustments		352,018			571,118
Net cash flows from operating activities		(1,215,833	)		(1,133,794	)
Cash flows from investing activities:
Purchase of property and equipment		(362,133	)		(363,729	)
Cash flows from financing activities:
Advances received from member		1,577,966			1,497,523
Net change in cash		-			-
Cash, beginning of year		-			-
Cash, end of year	$	-		$	-

See Notes to Financial Statements

6

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies:

Nature of Operations and Organization

Smithers Avanza Toxicology Services LLC (Company) was formed as a Delaware limited liability company on January 1, 2013. The Company is a boutique contract research organization specializing in general toxicology; vaccine safety; and developmental and reproductive toxicology services.

Pursuant to the Company’s limited liability agreement (Operating Agreement), the Company issued 197 Class A Units, representing a 98.5% ownership interest, to The Smithers Group, Inc. (Parent Company) and 3 Class B Units, representing a 1.5% ownership interest to a member of management.

In accordance with the Operating Agreement, profits are allocated first to the members in proportion to, and in such amounts as are needed to offset any prior losses and the remaining profits are allocated in proportion to their respective percentage interests. Losses are allocated first the members in proportion to, and in such amounts as are needed to offset any prior profits and the remaining losses are allocated in proportion to their respective percentage interests unless otherwise required by Treasury regulations.

Per the Operating Agreement, the Company will continue operations until it is dissolved and its affairs wound up in accordance with the provisions of the Operating Agreement (see Note 7).

Basis of Financial Statement Presentation

The accompanying financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

Liquidity and Capital Resources

The Company has historically been funded by the Parent Company. On May 1, 2019, the Company entered into an asset purchase agreement whereby the Company sold substantially all assets and operations to an unaffiliated entity, see Note 7.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

7

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies: (Continued)

Revenue and Cost Recognition

Revenue is recognized in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605, Revenue Recognition. Accordingly, revenue is recognized when it is realized/realizable and earned based on an assessment of whether the following four criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured.

The Company recognizes revenue on its contracts under the proportional performance method derived from the Company’s estimates of work performed as of each reporting date. Contract costs include all direct material, labor and indirect costs related to contract performance. Contract costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

The asset, unbilled costs and earned revenues represents revenues recognized in excess of amounts billed. The liability, deferred income / prebilled development represents billings in excess of revenues recognized.

Accounts Receivable

The Company carries its accounts receivable at cost less an allowance for doubtful accounts, if applicable. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of past write-offs, collections and current credit conditions.

The Company does not accrue interest on past due trade receivables. A receivable is considered past due if the Company has not received payment within thirty days after the due date. The Company's internal departments pursue delinquent accounts and the Company exhausts all means of collection prior to writing off a receivable as uncollectible.

Related Party Accounts Receivable and Accounts Payable

Related party accounts receivable and accounts payable represent amounts due from and to the Parent Company and entities affiliated through common ownership with the Parent Company. In the opinion of management, certain amounts are expected to be settled within twelve months of the balance sheet date and, accordingly, have been classified as current. The remaining balance has been classified as long-term.

8

SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies: (Continued)

Property and Equipment

Property and equipment are carried at cost. Major additions and betterments are charged to the property accounts while replacements, maintenance and repairs which do not improve or extend the life of the respective assets are expensed currently. When property is retired or otherwise disposed of, the cost of the property is removed from the asset account, accumulated depreciation is charged with an amount equivalent to the depreciation provided, and the difference, net of proceeds, is charged or credited to operations.

The Company evaluates the carrying value of its long-lived assets (related primarily to property and equipment) for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. Recoverability of asset to be held and used is measured by a comparison of the carrying amount of the asset to an estimate of the related asset’s future undiscounted cash flows over the remaining life of the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Depreciation and Amortization

Depreciation and amortization is provided using the straight-line method over the estimated useful lives of the assets.

Income Taxes

The Company is organized as a limited liability company and taxed as a partnership for federal income tax purposes, and accordingly, is not subject to federal income taxes. The income or loss of the Company is reportable by its members based on their distributive shares. Management of the Company has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years.

Effective January 1, 2018, the Company is required to comply with new IRS audit rules for partnerships. Under the new rules, if an audit of the Company’s income tax returns for tax years beginning after December 31, 2017, result in any adjustments, the IRS will collect the resulting taxes, penalties and interest directly from the Company, not the partners. Under the new rules, a partnership may elect to "push out" final audit adjustments determined at the partnership level. If elected, the tax attributable to the adjustments is assessed and collected from the partnership's partners. At the date of this report, the Partnership’s tax returns are not under examination by the IRS.

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SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies: (Continued)

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of the new guidance is that an entity will 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 standard provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. Additionally, the guidance requires disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. The amendments in this update will be effective prospectively for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. Transition to the new guidance may be done using either a full or modified retrospective method. The Company has not elected early adoption and is currently evaluating the full effect that the adoption of this standard will have on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), that requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than twelve months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2019, and is to be adopted using the modified retrospective approach for all leases presented in the financial statements for all years presented. Early adoption is permitted. The Company has not elected early adoption and is assessing the future impact of ASU 2016-02 on the Company’s financial statements.

2. Property and Equipment:

Following is a summary of property and equipment, as of December 31:

	2018		2017
At cost:
Machinery and equipment	$	2,940,305	$	2,606,427
Computer equipment		572,860		403,773
Leasehold improvements		362,531		362,531
Furniture and fixtures		58,446		58,446
Transportation		20,961		20,961
Construction in progress		-		140,831
Total property and equipment		3,955,103		3,592,969
Less accumulated depreciation and amortization		2,797,819		2,474,293
Property and equipment, net	$	1,157,284	$	1,118,676

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SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

3. Employee Savings Plan:

The Parent Company sponsors a retirement savings plan under Section 401(k) of the Internal Revenue Code. The plan covers substantially all employees of the Company who have attained the age of twenty-one and have completed thirty days of service. The plan provides for discretionary employer matching contributions and discretionary non-matching contributions. During 2018 and 2017, the Company made contributions to the plan totaling approximately $86,000 and $92,000, respectively.

4. Lease Commitments:

The Company operates out of two facilities which are accounted for as operating leases. One facility is subleased from Smithers Avanza Bioanalytical Services LLC (SABS) and the other facility is leased from a third party. SABS is affiliated with the Company through common ownership and management. SABS invoices the Company for its usage of the facility based on the square footage occupied by the Company which results in the Company paying for approximately 35% of the facility. The lease with SABS expires in December 2027 and contains an option to renew for two additional five year terms. Rent expense under this lease totaled $112,662 during each of the years ended December 31, 2018 and 2017. The facility lease with the third party expires in December 2024 and also contains an option to renew for two additional five year terms. Rent expense under this lease totaled $585,599 during each of the years ended December 31, 2018 and 2017. As both facility leases provide for escalating rents, rent expense is recognized on a straight-line basis over the terms of the agreements. As such, the Company recorded a liability for accrued rent representing the cumulative difference between lease expenses recognized in excess of lease payments made under these agreements. Accrued rent related to the SABS lease at December 31, 2018 and 2017 totaled $69,446 and $62,965 respectively while accrued rent related to the third party lease at December 31, 2018 and 2017 totaled $461,896 and $472,997 respectively.

The Company also leases storage space from a third party under an operating lease that expires in December 2019. Rent expense under this lease totaled $62,220 and $60,678 for the years ended December 31, 2018 and 2017, respectively.

Approximate future minimum obligations under non-cancelable operating lease commitments are as follows:

	Related		Third
	Party		Party
2019	$	108,836	$	678,381
2020		111,557		633,039
2021		114,346		652,030
2022		117,204		671,591
2023		120,134		691,739
Thereafter		511,332		712,491

In addition to the minimum lease payments, the above lease agreements may require payments for common area maintenance, real estate taxes, and insurance.

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SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

5. Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company grants credit to its customers, substantially all of which are concentrated in the pharmaceutical and chemical industries. The Company performs ongoing credit evaluations of its customers and does not require collateral. In addition, the Company maintains a reserve for potential credit losses, which have been within management’s expectations.

The Company had a concentration in the volume of business conducted with certain customers during the years ended December 31, 2018 and 2017. Sales to two customers represented approximately 26% of total sales in 2018 and sales to two separate customers represented approximately 26% of total sales in 2017. The Company also had a concentration in accounts receivable with three customers whose receivable balances amounted to approximately 48% of the total accounts receivable balance at December 31, 2018. At December 31, 2017, the Company had one customer whose receivable balance amounted to approximately 14% of the total accounts receivable balance.

6. Related Party Transactions:

The Company performs toxicology services for certain customers of Smithers Viscient, LLC (SMV). SMV is affiliated with the Company through common ownership and management. The invoicing and collection for these customers is performed by SMV. SMV invoices the Company for certain direct and indirect marketing costs and commissions incurred in connection with these sales. For the years ended December 31, 2018 and 2017, the Company incurred sales and marketing costs and commissions from SMV totaling $198,488 and $267,728, respectively. Revenue related to these customers totaled $743,153 and $1,399,859 for the years ended December 31, 2018 and 2017, respectively.

In addition, Smithers Rapra, Inc. (SMR) provides the Company with certain general and administrative services and incurs certain costs on its behalf (finance, human resources, software licenses, insurance, etc.). SMR is affiliated with the Company through common ownership and management. Accordingly, SMR invoices the Company for these direct and indirect costs. For the years ended December 31, 2018 and 2017, the Company incurred general and administrative and other costs from SMR totaling $581,016 and $437,241, respectively.

As discussed in Note 1, the Company has been funded by its Parent Company. For the years ended December 31, 2018 and 2017, the Company received operating advances of approximately $1,578,000 and $1,498,000, respectively, from the Parent Company. As of December 31, 2018 and 2017, the Company had amounts due to the Parent Company for advances totaling $8,830,469 and $7,252,503, respectively. These amounts are recorded in long-term liabilities as amounts due to member in the accompanying balance sheets. The Parent Company also provides the Company with certain management services. Accordingly, the Parent Company invoices the Company for these direct and indirect management services. For the years ended December 31, 2018 and 2017, the Company incurred costs for management services from the Parent Company totaling $192,490 and $156,388, respectively.

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SMITHERS AVANZA TOXICOLOGY SERVICES LLC

NOTES TO FINANCIAL STATEMENTS

6. Related Party Transactions: (Continued)

During 2017, the Company subcontracted with SABS to provide certain clinical pathology services. Accordingly, SABS invoiced the Company for these services. For the year ended December 31, 2017, the Company incurred costs for clinical pathology services from SABS totaling $162,752. During 2018, the Company performed these clinical pathology services in-house with its existing staff. Additionally, as disclosed in Note 4, the Company leases an operating facility from SABS.

The following is a summary of operating short-term related party accounts receivable and accounts payable, as of December 31:

	Related party		Related party
	accounts		accounts
	receivable		payable
December 31, 2018
Smithers Viscient, LLC	$	108,205	$	-
Smithers Rapra, Inc.		-		53,294
The Smithers Group		-		24,969
	$	108,205	$	78,263
December 31, 2017
Smithers Viscient, LLC	$	102,166	$	-
Smithers Rapra, Inc.		-		29,304
The Smithers Group		-		8,596
	$	102,166	$	37,900

7. Subsequent Events:

The Company has evaluated subsequent events through June 28, 2019, which is the date the financial statements were available to be issued and noted the following item for disclosure.

On May 1, 2019, the Company and its Parent Company entered into an asset purchase agreement with Oriole Toxicology Services LLC, an Indiana limited liability company (Purchaser) and Bioanalytical Systems, Inc., an Indiana corporation (Parent of Purchaser). Pursuant to the asset purchase agreement, the Purchaser acquired substantially all assets and operations of the Company and assumed certain liabilities as defined for cash totaling approximately $1,271,000 (less certain indebtedness repayments, as defined, subject to certain working capital adjustments, as defined), a promissory note from the Purchaser totaling $810,000 and 200,000 shares of the Parent of the Purchaser. Subsequent to the sale of the Company, all remaining assets and liabilities were assumed by the Parent Company.

13

EX-99.3

Exhibit 99.3

BIOANALYTICAL SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Bioanalytical Systems, Inc., together with its direct and indirect subsidiaries, is referred to herein collectively as “BASi”, “we,” “our”, or the “Company.”

Acquisition

On May 1, 2019, Bioanalytical Systems, Inc. (the “Company”), through its wholly-owned subsidiary Oriole Toxicology Services LLC (the “Purchaser”), acquired (the “Acquisition”) from Smithers Avanza Toxicology Services LLC (the “Seller” or “Smithers Avanza”), a consulting-based contract research laboratory located in Gaithersburg, Maryland, substantially all of the assets used by the 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 Purchaser, the Company, the Seller and the member of the Seller (the “Purchase Agreement”). The consideration for the Acquisition consisted of $1,270,646 in cash, subject to certain adjustments and an indemnity escrow of $125,000, 200,000 of the Company’s common shares and an unsecured promissory note in the initial principal amount of $810,000 made by 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 First Internet Bank (“FIB”), as described below.

The 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 Purchase Agreement, on May 1, 2019 the Purchaser assumed amended lease arrangements for certain premises in Gaithersburg, Maryland (the “Lease Arrangements”). Under the Lease Arrangements, the Purchaser agreed to lease the premises for a term of 5 years and 8 months, with two 5 year extensions at Purchaser’s option. Annual minimum rental payments under the initial term of the Lease Arrangements range from $400,000 to $600,000, provided that the Lease Arrangements provide the 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 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 $3,500,000 revolving credit facility to June 30, 2020, (ii) provide the Company with an additional term loan (the “New Term Loan”) in the amount of $1,270,646, 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 $1,100,000 (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 equal to $20,289 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 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 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 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 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 $2,000,000 for its President and Chief Executive Officer and to provide FIB an assignment of such life insurance policy as collateral.

The foregoing descriptions of the Purchase Agreement, the Fourth Amendment and the Lease Arrangements do not purport to be complete and are qualified in their entirety by the terms and conditions of those agreements, copies of which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2019.

Pursuant to the Purchase Agreement, the Company issued 200,000 of the Company’s common shares to the Seller. The shares were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) of the Securities Act as sales by an issuer not involving any public offering.

The accompanying unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of the Company and the historical financial statements of Smithers Avanza and is intended to provide information about how the Acquisition of Smithers Avanza and related financing may have affected the Company’s historical consolidated financial statements. The unaudited pro forma condensed combined statements of operations and comprehensive income information for the year ended September 30, 2018 and for the three months ended December 31, 2018 are presented as if the Acquisition and related financing occurred on October 1, 2017. The unaudited pro forma condensed combined balance sheet as of December 31, 2018 is presented as if the Acquisition and related financing had occurred on December 31, 2018. The pro forma adjustments are described in the accompanying notes and are based upon available information and assumptions that we believe are reasonable at the time of the filing of this report on Form 8-K/A.

The unaudited pro forma condensed combined financial statements were prepared for informational and illustrative purposes in accordance with Rule 8-05 of Regulation S-X. Such information is preliminary and based on currently available information and assumptions that the Company believes are reasonable. The acquisition accounting related to this unaudited pro forma information is dependent upon certain independent valuations and other studies that are still in process and under review by management and not yet finalized. The pro forma adjustments included herein have been made solely for the purposes of providing unaudited condensed combined financial information. Differences between the estimates reflected in this unaudited pro forma information and the final acquisition accounting will likely occur, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information and the combined company’s future consolidated financial condition or results of operations.

The unaudited pro forma condensed combined statement of operations and comprehensive income for the year ended September 30, 2018 was derived from the Company’s audited consolidated statement of operations and comprehensive income for the year ended September 30, 2018 and Smithers Avanza’s audited statements of income for the years ended December 31, 2017 and 2018.

The unaudited pro forma condensed combined statement of operations and comprehensive income for the three months ended December 31, 2018 was derived from the Company’s unaudited consolidated statement of operations and comprehensive income for the three months ended December 31, 2018 and the last three months statement of income for Smithers Avanza’s from the audited statement of income for the year ended December 31, 2018.

We present the unaudited pro forma condensed combined financial statements for informational purposes only. The unaudited pro forma condensed combined financial statements are not necessarily indicative of what our financial position or results of operations would have been had we completed the Acquisition as of the dates indicated. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined company.

Smithers Avanza’s assets and liabilities are recorded at their estimated fair values. Pro forma purchase price allocation adjustments have been made for the purpose of providing unaudited pro forma condensed combined financial information based on current estimates and currently available information, and are subject to revision based on final, independent determinations of fair value and final allocation of purchase price to the assets and liabilities of the business acquired. The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill. The final determination of the purchase price, fair values and resulting goodwill may differ significantly from what is reflected in these unaudited pro forma condensed combined financial statements.

The following information provides further details about the estimated net step-up in fair value and/or the estimated fair value at the acquisition date for some key balance sheet items. These fair values are preliminary until the Company completes its work with the use of a third party valuation firm, and are subject to change. Any changes to the initial estimates of the fair value of assets and liabilities will impact residual goodwill and may affect future earnings.

	Estimated Fair Value
Step up in property and equipment value	$	654
Goodwill		523

The unaudited pro forma condensed consolidated statements of operations and comprehensive income (loss) do not reflect the realization of any expected cost savings or other synergies resulting from the Acquisition as a result of any initiatives planned subsequent to the closing of the Acquisition and related financing, nor do they reflect any nonrecurring costs directly attributable to the Acquisition and related financing.

The accounting policies used in the presentation of the following unaudited pro forma condensed combined financial information is set out in the Company’s audited consolidated financial statements for the fiscal year ended September 30, 2018. Certain reclassifications of Smithers Avanza’s historical statements of income and balance sheet have been made to conform to the Company's accounting policies.

The unaudited pro forma condensed consolidated financial statements, along with the assumptions underlying the pro forma adjustments, are described in the accompanying notes and should be read in conjunction with the historical consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2018, the Company's quarterly report on Form 10-Q for the three months ended December 31, 2018, and Smithers Avanza’s historical financial statements included in Exhibit 99.1 contained in this Form 8-K/A.

Bioanalytical Systems, Inc. and Subsidiaries

Pro Forma Consolidated Statements of Operations and Comprehensive Income (Unaudited)

For the Fiscal Year Ended September 30, 2018

(In thousands, except per share data)

	Bioanalytical Systems Inc. Historical			Smithers Avanza Toxicology Services  LLC Historical
	Fiscal Year Ended September 30, 2018			Fiscal Year Ended December  31, 2018			Pro Forma Adjustments Increase (Decrease)			Notes	Bioanalytical Systems Inc. Pro Forma Combined
Total Revenue	$	26,346		$	7,475		$	-			$	33,821
Cost of Revenue		18,230			6,998			286		(a)		25,514
Gross profit		8,116			477			(286	)			8,307
Operating expenses:
Selling		1,541			526							2,067
Research and development		596			-							596
General and administrative		5,965			1,518			9		(a)		7,492
Total operating expenses		8,102			2,044			9				10,155
Operating income (loss)		14			(1,567	)		(295	)			(1,848	)
Other income (expense)		6			-							6
Interest expense		(274	)		-			(65	)	(b)		(339	)
Net income (loss) before income taxes		(254	)		(1,567	)		(360	)			(2,181	)
Income tax (benefit) expense		(60	)									(60	)
Net income	$	(194	)	$	(1,567	)	$	(360	)		$	(2,121	)
Other comprehensive income		-			-			-				-
Comprehensive income	$	(194	)	$	(1,567	)	$	(360	)		$	(2,121	)
Basic net income (loss) per share	$	(0.02	)	$	(0.18	)					$	(0.24	)
Diluted net income (loss) per share	$	(0.02	)	$	(0.18	)					$	(0.24	)
Weighted common shares outstanding:
Basic		8,771			8,771			200				8,971
Diluted		8,771			8,771			200				8,971

Footnotes

(a) To reflect the following pro forma adjustments for step up in value of personal property

	Pre-Tax Adjustment
Record additional depreciation expense for step up in value for personal property
Cost of Revenue	$	286
General & Administrative expenses		9

(b) To reflect the following pro forma adjustments for recognition of additional financing to fund purchase of Smithers Avanza

	Pre-Tax Adjustment
Record additional interest expense for new financing to fund purchase
Interest Expense	$	55
Debt Issue Costs		10

Bioanalytical Systems, Inc. and Subsidiaries

Pro Forma Consolidated Statements of Operations and Comprehensive Income (Unaudited)

For the Three Months Ended December 31, 2018

(In thousands, except per share data)

	Bioanalytical Systems Inc. Historical			Smithers Avanza Toxicology Services LLC Historical
	Three Months Ended December 31, 2018			Three Months Ended December 31,  2018			Pro Forma Adjustments			Notes	Bioanalytical Systems Inc. Pro Forma Combined
Total Revenue	$	8,625		$	1,687		$	-			$	10,312
Cost of Revenue		6,206			1,778			72		(a)		8,056
Gross profit		2,419			(91	)		(72	)			2,256
Operating expenses:
Selling		653			152							805
Research and development		124			-							124
General and administrative		1,601			412			2		(a)		2,015
Total operating expenses		2,378			564			2				2,944
Operating income (loss)		41			(655	)		(74	)			(688	)
Other income		1			-							1
Interest expense		(126	)		-			(18	)	(b)		(144	)
Net income (loss) before income taxes		(84	)		(655	)		(92	)			(831	)
Income tax expense (benefit)		1			-							1
Net income (loss)		(85	)		(655	)		(92	)			(832	)
Other comprehensive income		-			-			-				-
Comprehensive income	$	(85	)	$	(655	)	$	(92	)		$	(832	)
Basic net income (loss) per share	$	(0.01	)	$	(0.06	)					$	(0.08	)
Diluted net income (loss) per share	$	(0.01	)	$	(0.06	)					$	(0.08	)
Weighted common shares outstanding:
Basic		10,245			10,245			200				10,445
Diluted		10,245			10,245			200				10,445

Footnotes

(a) To reflect the following pro forma adjustments for step up in value of personal property

	Pre-Tax Adjustment
Record additional depreciation expense for step up in value for personal property.
Cost of Revenue	$	72
General & Administrative expenses		2

(b) To reflect the following pro forma adjustments for recognition of additional financing to fund purchase of Smithers Avanza

	Pre-Tax Adjustment
Record additional interest expense for new financing to fund purchase.
Interest Expense	$	15
Debt Issue Costs		3

Bioanalytical Systems Inc.

Pro Forma Consolidated Balance Sheet (Unaudited)

As of December 31, 2018

(In thousands)

	Bioanalytical Systems, Inc. Historical			Smithers Avanza Toxicology Services LLC Historical
	As of December 31, 2018			As of December 31, 2018			Pro Forma Adjustments			Notes	Bioanalytical Systems, Inc. Pro Forma Combined
Assets
Current assets
Cash	$	723		$	-		$	(65	)	(e)	$	658
Account receivables
Trade, net of allowance		3,665			705							4,370
Related party accounts receivable		-			108			(108	)	(a)		-
Unbilled revenues		984			471							1,455
Inventories, net		1,171										1,171
Prepaid expenses		1,194			75							1,269
Total current assets		7,737			1,359			(173	)			8,923
Property and equipment, net		16,761			1,157			505		(a), (c)		18,423
Lease rent receivable		121			-							121
Deferred tax asset		31			-							31
Goodwill		3,072			-			523		(c)		3,595
Other intangible assets		3,154			-							3,154
Other assets		27			-							27
Total assets	$	30,903		$	2,516		$	854			$	34,274
Liabilities
Current liabilities
Accounts payable	$	3,073		$	358		$	(358	)	(a)	$	3,073
Related party accounts payable		-			78			(78	)	(a)		-
Restructuring liability		558			-			-				558
Accrued expenses		1,888			407							2,295
Customer advances		5,320			554							5,874
Current portion of capital lease obligation		54			-							54
Current portion of long-term debt		920			-			139		(d), (f)		1,059
Total current liabilities		11,813			1,397			(297	)			12,913
Capital lease obligation, less current portion		32			-							32
Long-term debt, less current portion, net of debt issuance costs		8,310			9,362			(7,485	)	(a), (d),(e),(f)		10,187
Total liabilities		20,155			10,759			(7,783	)			23,132
Shareholders’ Equity
Preferred shares, authorized 1,000,000 shares, no par value; 35 shares issued and outstanding at December 31, 2018		35			-			-				35
Common shares, no par value:
Authorized 19,000,000 shares; 10,445,277 shares issued and outstanding on a pro forma basis at December 31, 2018		2,523						50		(b)		2,573
Members Capital					(8,243	)		8,243		(a)		-
Additional paid in capital		24,582						344		(b)		24,926
Accumulated deficit		(16,392	)									(16,392	)
Total shareholders’ equity		10,748			(8,243	)		8,637				11,142
Total liabilities and shareholders’ equity	$	30,903		$	2,516		$	854			$	34,274

Footnotes

(a) To reflect the following pro forma adjustment per terms of Asset Purchase Agreement, as follows:

	Pre-Tax Adjustment
Exclude certain assets and liabilities according to the terms of the Asset Purchase Agreement
Related Party Accounts Receivable	$	(108	)
Accounts Payable		(358	)
Property and equipment, net		(150	)
Related Party Accounts Payable		(78	)
Long-term debt not assumed		(9,362	)
Member Equity - prior owners		8,243

(b) To reflect consideration paid for Smithers Avanza Toxicology Services LLC

	Pre-Tax Adjustment
Notes Payable	$	1,271
Seller note payable		810
Common Stock (200,000 shares at par)		50
Paid in Capital (value in excess of par)		344

(c) To reflect purchase price in excess of book value

	Pre-Tax Adjustment
Reflects the preliminary estimate of the fair value of the acquired intangible assets and estimated fair value of tangible assets for pro forma purposes
Step up in personal property value	$	655
Goodwill		523

(d) To reflect the following pro forma adjustments for bank financing needed to close

	Pre-Tax Adjustment
Bank financing needed to fund consideration paid to Smithers Avanza Toxicology Services LLC
Current portion of long-term debt	$	79
Long-term debt, less current portion, net of debt issuance costs		1,192

(e) To reflect the following pro forma adjustments from financing costs

	Pre-Tax Adjustment
Establish debt issue costs in the balance sheet
Long-term debt, less current portion, net of debt issuance costs	$	(65	)
Cash		(65	)

(f) To reflect the following pro forma adjustments for seller note payable

	Pre-Tax Adjustment
Record seller note payable as part of consideration paid to Smithers Avanza Toxicology Services LLC
Current portion of long-term debt	$	60
Long-term debt, less current portion, net of debt issuance costs		750