BASi Files Form 8K Notice Of Non-Compliance With A Continued Listing Rule Non-Reliance On Previously Issued Financial Statements

Bioanalytical Systems, Inc. (NASDAQ:BASI) announced today that on August 15, 2013, the Company received a letter from the Nasdaq Listing Qualifications Department stating that the Company no longer complies with the Listing Rules for continued listing of the Company's common shares on the Nasdaq Capital Market since the Company has not yet filed its Form 10-Q for the period ended June 30, 2013 with the Securities and Exchange Commission.

The Letter further stated that, under the listing rules, the Company has until October 14, 2013 to submit a plan to regain compliance. If the Company's plan is accepted, the Company may be granted an exception of up to 180 calendar days from the initial filing's due date, or until February 10, 2014, to regain compliance. The Company intends to comply with the dates given above in order to regain compliance with the listing rules.

On August 14, 2013, the Company filed a 12b-25 indicating that the Company could not, without unreasonable effort or expense, file its Form 10-Q for the three and nine months ended June 30, 2013 by the original due date of August 14, 2013 until management could resolve a complex accounting issue related to the accounting treatment for the outstanding warrants.

Non-Reliance on Previously Issued Financial Statements

On August 19, 2013, the Audit Committee of Bioanalytical Systems, in consultation with management, concluded that, because of an error identified in the Company's previously issued financial statements for the fiscal years ended September 30, 2011, September 30, 2012 and the first two fiscal quarters of 2013, the Company should restate its previously issued financial statements for the relevant periods. Accordingly, investors should no longer rely upon the Company's previously released financial statements and related auditors' reports for these periods or any earnings releases or other communications relating to these periods.

The error, identified by management, is related to the accounting for the Class A and B Warrants as part of the May 2011 public offering. At the time of the transaction, the Company incorrectly recorded the fair value of the warrants as equity. The proper treatment under ASC 815-40 would have been to record the fair value of the warrants as a liability due to the provision in Section 3e of the Common Stock Purchase Warrant that could require net cash settlement of the warrants. The Audit Committee and management have discussed the matters reported herein with the Company's prior and current independent registered accounting firms, as applicable. The Audit Committee, with the assistance of independent counsel, is conducting an investigation into the circumstances surrounding the error.

The Company is evaluating the debt covenants at each reporting period and expects to be in breach of the tangible net worth ratios in fiscal 2013. The Company is communicating with its lenders to obtain waivers for the applicable periods, if necessary.

The Company expects all amendments and restatements to the financial statements affected to be non-cash in nature.

The Company has determined that the below-detailed restatements of its financial statements resulted from a material weakness in its internal control over financial reporting, specifically related to its process and procedures related to the accounting for stock purchase warrants. The Company has been actively engaged in developing a remediation plan to address the material weakness. Implementation of the remediation plan is in process and consists of, among other things, redesigning the procedures to enhance its identification, capture, review, approval and recording of contractual terms included in equity arrangements. The Company also intends to seek the counsel of other experts in accounting before discussions with its auditors on future unusual and non-recurring transactions.

The following tables summarize the effects of the previously discussed unaudited restatement adjustments on the consolidated statements of operations for the periods ended:

     

Three Months ended
                                   
June 30, 2011 Fiscal 2011 Fiscal 2012
As             As As
Reported       Error       Restated Reported       Error       Restated Reported       Error       Restated
 
Total revenue $ 8,478 $ -- $ 8,478 $ 33,144 $ $ 33,144 $ 28,208 $ $ 28,208
Total cost of revenue   5,733           --           5,733     22,638           -           22,638     21,370                   21,370  
 
Gross profit 2,745 -- 2,745 10,506 -- 10,506 6,838 -- 6,838
 
Total operating expenses 2,264 -- 2,264 9,219 -- 9,219 9,329 9,329
Restructuring charges   --           --           --     --           --           --     3,195                   3,195  
 
Operating income (loss) 481 -- 481 1,287 -- 1,287 (5,686 ) -- (5,686 )
 
Interest expense (70 ) -- (70 ) (706 ) -- (706 ) (714 ) -- (714 )
Warrant valuation (increase) decrease -- (185 ) (185 ) -- 1,759 1,759 -- 73 73
Other income   7           --           7     12           --           12     12           --         12  
 
Income (loss) before income taxes 418 (185 ) 233 593 1,759 2,352 (6,388 ) 73 (6,315 )
 
Income tax expense   --           --           --     50           --           50     2                   2  
 
Net income (loss) 418 (185 ) 233 543 1,759 2,302 (6,390 ) 73 (6,317 )
 
Less: Deemed dividend for
Series A Preferred Shares (3,277 ) (2,229 ) (5,506 ) (3,277 ) (2,229 ) (5,506 ) -- -- --
Less: Preferred stock dividends (991 ) -- (991 ) (991 ) -- (991 ) -- -- --
                                                     
Net loss applicable to
common shareholders $ (3,850 )       $ (2,414 )       $ (6,264 ) $ (3,725 )       $ (470 )       $ (4,195 ) $ (6,390 )       $ 73       $ (6,317 )
 
Basic net income (loss) per share $ (0.65 ) $ (0.41 ) $ (1.06 ) $ (0.66 ) $ (0.08 ) $ (0.74 ) $ (0.89 ) $ 0.01 $ (0.88 )
 

                                                     
Three Months Ended Three Months Ended Six Months ended
December 31, 2012 March 31, 2013 March 31, 2013
As As As
Reported       Error       Restated Reported       Error       Restated Reported       Error       Restated
 
Total revenue $ 5,803 $ -- $ 5,803 $ 5,156 $ $ 5,156 $ 10,960 -- $ 10,960
Total cost of revenue   3,948           --         3,948     3,898           --           3,898     7,846           --           7,846  
 
Gross profit 1,855 -- 1,855 1,258 -- 1,258 3,114 -- 3,114
 
Total operating expenses 1,553 -- 1,553 1,267 -- 1,267 2,820 -- 2,820
Restructuring charges   --           --         --     --           --           --     --           --           --  
 
Operating income (loss) 302 -- 302 (9 ) -- (9 ) 294 -- 294
 
Interest expense (165 ) -- (165 ) (163 ) -- (163 ) (329 ) -- (329 )
Warrant valuation (increase) decrease -- 117 117 -- (142 ) (142 ) -- (25 ) (25 )
Other income   2           --         2     3           --           3     5           --           5  
 
Income (loss) before income taxes 139 117 256 (169 ) (142 ) (311 ) (30 ) (25 ) (55 )
 
Income tax expense   --           --         --     --           --           --     --           --           --  
 
Net income (loss) $ 139         $ 117       $ 256   $ (169 )       $ (142 )       $ (311 ) $ (30 )       $ (25 )       $ (55 )
 
Basic net income (loss) per share $ 0.02 $ 0.01 $ 0.03 $ (0.02 ) $ (0.02 ) $ (0.04 ) $ (0.00 ) $ (0.01 ) $ (0.01 )
 

The following tables summarize the effects of the previously discussed unaudited restatement adjustments on the consolidated balance sheet items.

                                                     
As of June 30, 2011 As of September 30, 2011 As of September 30, 2012
As As As
Reported       Error       Restated Reported       Error       Restated Reported       Error       Restated
 
Total assets $ 34,310         $ --         $ 34,310     $ 32,346         $ --         $ 32,346   $ 26,975         $ --         $ 26,975  
 
Total all other liabilities 18,057 -- 18,057 16,760 -- 16,760 17,385 -- 17,385
Warrant liability   --           3,230           3,230     --           1,286           1,286     --           1,213           1,213  
Total liabilities 18,057 3,230 21,287 16,760 1,286 18,046 17,385 1,213 18,598
 
Shareholders' equity:
Preferred Shares 2,135 -- 2,135 2,135 -- 2,135 1,335 -- 1,335
Common Shares 1,690 -- 1,690 1,698 -- 1,698 1,871 -- 1,871
Additional paid-in capital 19,370 (816 ) 18,554 19,408 (816 ) 18,592 20,451 (816 ) 19,635
Accumulated deficit (7,038 ) (2,414 ) (9,452 ) (7,706 ) (470 ) (8,176 ) (14,096 ) (397 ) (14,493 )
Accumulated other
comprehensive income   96           --           96     51           --           51     29           --           29  
Total shareholders' equity   16,253           (3,230 )         13,023     15,586           (1,286 )         14,300     9,590           (1,213 )         8,377  
 
Total liabilities
and shareholders' equity $ 34,310         $ --         $ 34,310   $ 32,346         $ --         $ 32,346   $ 26,975         $ --         $ 26,975  
 
                                   

As of December 31, 2012 As of March 31, 2013
As As
Reported       Error       Restated Reported       Error       Restated
 
Total assets $ 25,064         $ --         $ 25,064   $ 24,790         $         $ 24,790  
 
Total all other liabilities 15,232 -- 15,232 14,999 -- 14,999
Warrant liability   --           1,096           1,096     --           1,238           1,238  
Total liabilities 15,232 1,096 16,328 14,999 1,238 16,237
 
Shareholders' equity:
Preferred Shares 1,335 -- 1,335 1,335 -- 1,335
Common Shares 1,876 -- 1,876 1,880 -- 1,880
Additional paid-in capital 20,541 (816 ) 19,725 20,618 (816 ) 19,802
Accumulated deficit (13,957 ) (280 ) (14,237 ) (14,126 ) (422 ) (14,548 )
Accumulated other
comprehensive income   37           --           37     84           --           84  
Total shareholders' equity   9,832           (1,096 )         8,736     9,791           (1,238 )         8,553  
 
Total liabilities and
shareholders' equity $ 25,064         $ --         $ 25,064   $ 24,790         $ --         $ 24,790  

Until the Company has restated and reissued its results for the applicable periods, investors and other users of the Company's SEC filings are cautioned not to rely on the Company's financial statements for (i) the quarterly periods ended June 30, and September 30, 2011, (ii) the annual period ended September 30, 2012, and (iii) the quarterly periods ended December 31, 2012 and March 31, 2013.

About Bioanalytical Systems, Inc.

BASi is a pharmaceutical development company providing contract research services and monitoring instruments to the world's leading drug development companies and medical research organizations. The company focuses on developing innovative services and products that increase efficiency and reduce the cost of taking a new drug to market. Visit www.BASinc.com for more about BASi.

This press release contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements include our expectations regarding changes in our results of operations to be reported for (i) the quarterly periods ended June 30, and September 30, 2011, (ii) the annual period ended September 30, 2012, and (iii) the quarterly periods ended December 31, 2012 and March 31, 2013 when filed with the SEC. Readers are cautioned that any such forward looking statements are not guarantees of future results and involve risks and uncertainties. Our work to address the warrant accounting issue is ongoing and the results discussed above may change as we complete our analysis.

Copyright Business Wire 2010