UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

~~FORM 10-Q~~(Amendment No. 1)

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended ~~March 31,~~June 30, 2021

OR
¨ ☐	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

INOTIV, INC.

~~(Exact~~(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)~~

(765) 463-4527

(Registrant's telephone number, including area code)

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




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

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. YESx⌧ 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). YESx⌧ NO ¨◻

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. (Check):


Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧	Smaller Reporting Company ☒	Emerging growth company ☐

~~Large accelerated filer~~ ¨ ~~Accelerated filer~~ ¨ ~~Non-accelerated filer~~ x

~~Smaller Reporting Company~~ x ~~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. ¨◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨☐ NO x☒

As of ~~May 6,~~August 9, 2021, ~~15,827,839~~15,914,695 of the ~~registrant’s~~registrant's common shares were outstanding.

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EXPLANATORY NOTE

Inotiv, Inc. (the “Company,” “we,” “us” or “our”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 (the “Amendment”) to amend and restate certain financial information and related footnote and MD&A disclosure in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 originally filed with the Securities and Exchange Commission (the “SEC”) on August 13, 2021 (the “Existing Quarterly Report”). This Amendment also amends the disclosure regarding disclosure controls and procedures and internal controls over financial reporting in Item 4 of Part I of the Existing Quarterly Report, amends the disclosure regarding Risk Factors in Item 1A of Part II of the Existing Quarterly Report, and includes as exhibits new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, from the Company's Chief Executive Officer and Chief Financial Officer dated as of the filing date of this Form 10-Q/A. Item 6 of Part II of the Existing Quarterly Report is amended to reflect the filing of these new certifications.

Background of Restatement

On December 15, 2021, the Company's management and the Audit Committee of the Board of Directors concluded that, due to a failure to properly account for certain tax attributes related to an acquisition that occurred in the Company's third fiscal quarter, the Company's previously issued unaudited interim financial statements as of and for the three and nine months ended June 30, 2021 included in the Existing Quarterly Report should no longer be relied upon. Specifically, management and the Audit Committee concluded that, in accordance with ASC 805-740, the Company should have established a deferred tax liability with an offset to goodwill in connection with the accounting for the opening balance sheet of the Bolder BioPATH acquisition as a result of book-to-tax differences primarily related to the customer relationship intangible and property and equipment identified in the Company’s June 30, 2021 quarterly financial statements. Subsequent to the establishment of the deferred tax liability as of the opening balance sheet, the Company should have reversed a portion of its (i.e. the acquiror) pre-existing valuation allowance and taken the income tax benefit through the statements of operations for the three and nine months ended June 30, 2021. The impact of these adjustments is to increase the amount of goodwill and deferred tax liability recorded on the June 30, 2021 balance sheet by approximately $4.9 million and to reduce the Company’s valuation allowance recorded on the June 30, 2021 balance sheet and increase income tax benefit in the statements of operations for the three and nine month periods ended June 30, 2021 by approximately $4.9 million. Each of these adjustments is a non-cash item.

As a result, the Company’s management, together with the Audit Committee, determined that the Company’s financial statements and other financial data as of and for the quarterly period ended June 30, 2021 included in the Existing Quarterly Report should be restated in this Form 10-Q/A as a result of the error. This restatement results in non-cash, non-operating financial statement corrections.

The financial information that has been previously filed or otherwise reported for this period is superseded by the information in this Form 10-Q/A, and the financial statements and related financial information contained in the Existing Quarterly Report should no longer be relied upon. On December 16, 2021, the Company filed a Current Report on Form 8-K disclosing the non-reliance on the financial statements included in the Existing Quarterly Report.

This Amendment amends and restates Items 1, 2 and 4 of Part I and Items 1A and 6 of Part II of the Existing Quarterly Report, and no other information included in the Existing Quarterly Report is amended hereby. The explanatory caption at the beginning of each item of this Amendment sets forth the nature of the revisions to that item.

All referenced amounts in this Amendment for prior periods and prior period comparisons reflect the balances and amounts on a restated basis.

Except as described above, no other information included in the Existing Quarterly Report is being amended or updated by this Amendment, and this Amendment does not purport to reflect any information or events subsequent to the Existing Quarterly Report. This Amendment continues to describe the conditions as of the date of the Existing Quarterly Report and, except as expressly contained herein, we have not updated, modified or supplemented the disclosures contained in the Existing Quarterly Report. Accordingly, this Amendment should be read in conjunction with the Existing Quarterly Report and with our filings with the SEC subsequent to the Existing Quarterly Report.

Internal Control Considerations

In connection with the restatement, management has reevaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of June 30, 2021. The Company’s management has concluded that, in light of the error described above, a material weakness exists in the Company’s internal control over financial reporting and that certain of

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the Company’s disclosure controls and procedures were not effective as of June 30, 2021. Management plans to enhance its system of evaluating and implementing the accounting standards that apply to our financial statements, specifically as it relates to the tax impact of acquisitions that qualify as stock transactions for tax purposes, including enhanced training of our personnel and an assessment of our non-audit third-party professionals with whom we consult regarding application of accounting guidance related to the tax impact of stock transactions. For a discussion of management’s consideration of our disclosure controls and procedures, internal controls over financial reporting, and the material weakness identified, see Part I, Item 4, “Controls and Procedures” of this Form 10-Q/A.

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		~~Page~~
~~PART I~~	~~FINANCIAL INFORMATION~~		Page
PART I	FINANCIAL INFORMATION

Item 1	Restated Condensed Consolidated Financial Statements:		5
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2021 (Unaudited) and September 30, 2020	3	5
	Condensed Consolidated Statements of Operations for the Three Months and ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2021 and 2020 (Unaudited)	4	6
	Consolidated Statement of Shareholders’ Equity for the Three Months and ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2021 and 2020 (Unaudited)	5	7
	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2021 and 2020 (Unaudited)	6	8
	Notes to Condensed Consolidated Financial Statements	7	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17	26
Item 3	Quantitative and Qualitative Disclosures about Market Risk	25	36
Item 4	Controls and Procedures	25

~~PART II~~	~~OTHER INFORMATION~~	25

~~Item 1~~	~~Legal Proceedings~~	25
~~Item 1A~~	~~Risk Factors~~	25
~~Item 6~~	~~Exhibits~~		2636
	~~Signatures~~
27PART II	OTHER INFORMATION		37

Item 1	Legal Proceedings		37
Item 1A	Risk Factors		37
Item 6	Exhibits		40
	Signatures		41

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. RESTATED FINANCIAL STATEMENTS

The restated consolidated financial statements and supplementary data, including the notes to the restated condensed consolidated financial statements, set forth in this Item 1, have been revised to reflect the restatement occurring subsequent to the filing of the original Form 10-Q.

INOTIV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As Restated, See Note 2

(In thousands, except share amounts)

June 30,

September 30,


2021

2020

(Unaudited)

Assets





Current assets:





Cash and cash equivalents

$
24,660

$
1,406

Accounts receivable



Trade, net of allowance of $513 at June 30, 2021 and $561 at September 30, 2020

15,487

8,681

Unbilled revenues and other

4,472

2,142

Inventories, net

977

700

Prepaid expenses

2,466

2,371

Total current assets

48,062

15,300



Property and equipment, net

44,678

28,729

Operating lease right-of-use assets, net

8,695

4,001

Finance lease right-of-use assets, net

66

4,778

Goodwill

50,617

4,368

Other intangible assets, net

24,336

4,261

Lease rent receivable

106

75

Other assets

180

81

Total assets

$
176,740

$
61,593



Liabilities and shareholders’ equity



Current liabilities:



Accounts payable

$
4,724

$
3,196

Restructuring liability

0

168

Accrued expenses

4,741

2,688

Customer advances

19,969

11,392

Capex line of credit

931

2,613

Current portion on long-term operating lease

1,916

866

Current portion of long-term finance lease

29

4,728

Current portion of long-term debt

14,752

5,991

Total current liabilities

47,062

31,642

Long-term operating leases, net

6,884

3,344

Long-term finance leases, net

39

44

Long-term debt, less current portion, net of debt issuance costs

28,700

18,826

Deferred tax liabilities, net

294

141

Total liabilities

82,979

53,997



Shareholders’ equity:



Preferred shares, authorized 1,000,000 shares, 0 par value:



NaN Series A shares at June 30, 2021 and 25 shares at September 30, 2020 issued and outstanding at $1,000 stated value

0

25

Common shares, 0 par value:



Authorized 19,000,000 shares; 15,866,655 issued and outstanding at June 30, 2021 and 10,977,675 at September 30, 2020

3,928

2,706

Additional paid-in capital

110,230

26,775

Accumulated deficit

(20,397)

(21,910)

Total shareholders’ equity

93,761

7,596

Total liabilities and shareholders’ equity

$
176,740

$
61,593

March 31,
2021 September 30,
2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 2,186 $ 1,406
Accounts receivable
Trade, net of allowance of $500 at March 31, 2021 and $561 at September 30, 2020 9,340 8,681
Unbilled revenues and other 3,338 2,142
Inventories, net 872 700
Prepaid expenses 2,135 2,371
Total current assets 17,871 15,300

Property and equipment, net 29,353 28,729
Operating lease right-of-use assets, net
4,105 4,001
Finance lease right-of-use assets, net
4,710 4,778
Goodwill 4,368 4,368
Other intangible assets, net 3,949 4,261
Lease rent receivable 129 75
Other assets 86 81

Total assets $ 64,571 $ 61,593

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable $ 3,967 $ 3,196
Restructuring liability 168
Accrued expenses 2,932 2,688
Customer advances 15,186 11,392
Capex line of credit — 2,613
Current portion on long-term operating lease 1,004 866
Current portion of long-term finance lease 4,664 4,728
Current portion of long-term debt 8,317 5,991
Total current liabilities 36,070 31,642
Long-term operating leases, net 3,278 3,344
Long-term finance leases, net 42 44
Long-term debt, less current portion, net of debt issuance costs 17,925 18,826
Deferred tax liabilities 180 141
Total liabilities 57,495 53,997

Shareholders’ equity:
Preferred shares, authorized 1,000,000 shares, no par value:
No Series A shares at March 31, 2021 and 25 shares at September 30, 2020 issued and outstanding at $1,000 stated value — 25
Common shares, no par value:
Authorized 19,000,000 shares; 11,179,041 issued and outstanding at March 31, 2021 and 10,977,675 at September 30, 2020 2,756 2,706
Additional paid-in capital 27,319 26,775
Accumulated deficit (22,999 ) (21,910 )
Total shareholders’ equity 7,076 7,596
Total liabilities and shareholders’ equity $ 64,571 $ 61,593
The accompanying notes are an integral part of the condensed consolidated financial statements
3
5

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INOTIV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
As Restated, See Note 2
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020

2021

2020

Service revenue

$
21,924

$
14,852

$
56,858

$
42,185

Product revenue

968

913

2,671

2,510

Total revenue

22,892

15,765

59,529

44,695

Cost of service revenue

14,701

10,113

38,204

29,119

Cost of product revenue

545

588

1,477

1,730

Total cost of revenue

15,246

10,701

39,681

30,849

Gross profit

7,646

5,064

19,848

13,846

Operating expenses:

Selling

950

692

2,343

2,672

Research and development

107

105

290

429

Start up costs

479

120

841

232

General and administrative

7,813

4,624

18,584

12,205

Total operating expenses

9,349

5,541

22,058

15,538

Operating loss

(1,703)

(477)

(2,210)

(1,692)

Interest expense

(449)

(382)

(1,163)

(1,085)

Other income

1

1

180

13

Net income (loss) before income taxes

(2,151)

(858)

(3,193)

(2,764)

Income tax expense (benefit)

(4,753)

21

(4,706)

129

Net income (loss)

$
2,602

$
(879)

$
1,513

$
(2,893)

Basic net income (loss) per share

$
0.18

$
(0.08)

$
0.12

$
(0.27)

Diluted net income (loss) per share

$
0.17

$
(0.08)

$
0.12

$
(0.27)

Weighted common shares outstanding:

Basic

14,656

10,910

12,274

10,807

Diluted

15,383

10,910

12,948

10,807

Three Months Ended March 31, Six Months Ended March 31,
2021 2020 2021 2020
Service revenue $ 17,902 $ 15,191 $ 34,934 $ 27,333
Product revenue 849 821 1,702 1,597
Total revenue 18,751 16,012 36,636 28,930

Cost of service revenue 11,949 10,207 23,502 19,118
Cost of product revenue 522 612 933 1,142
Total cost of revenue 12,471 10,819 24,435 20,260

Gross profit 6,280 5,193 12,201 8,670
Operating expenses:
Selling 1,175 1,447 2,138 2,665
Research and development 203 162 399 324
General and administrative 5,423 3,779 10,171 6,896
Total operating expenses 6,801 5,388 12,708 9,885

Operating loss (521 ) (195 ) (507 ) (1,215 )

Interest expense (366 ) (392 ) (713 ) (703 )
Other income 179 10 179 12
Net loss before income taxes (708 ) (577 ) (1,041 ) (1,906 )

Income tax expense 15 11 48 108

Net loss $ (723 ) $ (588 ) $ (1,089 ) $ (2,014 )

Basic net loss per share $ (0.06 ) $ (0.05 ) $ (0.10 ) $ (0.19 )
Diluted net loss per share $ (0.06 ) $ (0.05 ) $ (0.10 ) $ (0.19 )

Weighted common shares outstanding:
Basic 11,151 10,843 11,083 10,756
Diluted 11,151 10,843 11,083 10,756
The accompanying notes are an integral part of the condensed consolidated financial statements.

4
6

Table of Contents

INOTIV, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
As Restated, See Note 2
(In thousands, except number of shares)

Six Month Period Ended March 31, 2021
Additional Total
Preferred Shares Common Shares paid-in Accumulated shareholders’
Number Amount Number Amount capital deficit equity
Balance at September 30, 2020 25 $ 25 10,977,675 $ 2,706 $ 26,775 $ (21,910 ) $ 7,596
Net loss (366 ) (366 )
Stock option exercises 23,350 6 39 45
Stock based compensation 116,974 29 152 181

Balance at December 31, 2020 25 $ 25 11,117,999 $ 2,741 $ 26,966 $ (22,276 ) $ 7,456
Net loss (723 ) (723 )
Stock based compensation 12,502 3 275 278
Stock option exercises 36,040 9 56 65
Preferred stock conversion (25 ) (25 ) 12,500 3 22
Balance March 31, 2021 0 $ 0 11,179,041 $ 2,756 $ 27,319 (22,999 ) $ 7,076

Nine Month Period Ended June 30, 2021


Additional




Total

Preferred Shares

Common Shares

paid-in

Accumulated

shareholders’


Number

Amount

Number

Amount

capital

deficit

equity
Balance at September 30, 2020

25

$
25

10,977,675

$
2,706

$
26,775

$
(21,910)

$
7,596
Net loss

0

0

0

0

0

(366)

(366)
Stock option exercises

0

0

23,350

6

39

0

45
Stock based compensation

0

0

116,974

29

152

0

181
Balance at December 31, 2020

25

$
25

11,117,999

$
2,741

$
26,966

$
(22,276)

$
7,456

Net loss

0

0

0

0

0

(723)

(723)
Stock based compensation

0

0

12,502

3

275

0

278
Stock option exercises

0

0

36,040

9

56

0

65
Preferred stock conversion

(25)

(25)

12,500

3

22

0

0
Balance March 31, 2021

0

$
0

11,179,041

$
2,756

$
27,319

(22,999)

$
7,076

Net income

0

0

0

0

0

2,602

2,602
Stock based compensation

0

0

15,352

4

577

0

581
Stock option exercises

0

0

39,910

10

68

0

78
Stock issued in acquisition

0

0

1,588,235

397

34,055

0

34,452
Equity raise

0

0

3,044,117

761

48,211

0

48,972
Balance at June 30, 2021

0

$
0

15,866,655

$
3,928

$
110,230

(20,397)

$
93,761

Six Month Period Ended March 31, 2020
Additional Total
Preferred Shares Common Shares paid-in Accumulated shareholders’
Number Amount Number Amount capital deficit equity
Balance at September 30, 2019 35 $ 35 10,510,694 $ 2,589 $ 25,183 $ (17,097 ) $ 10,710
Adoption of accounting standard (128 ) (128 )
Net loss (1,426 ) (1,426 )
Stock issued in acquisition 240,000 60 1,073 1,133
Stock based compensation 54,363 14 67 81

Balance at December 31, 2019 35 $ 35 10,805,057 $ 2,663 $ 26,323 $ (18,651 ) $ 10,370
Net loss (588 ) (588 )
Stock based compensation 26,521 7 116 123
Stock option exercises 32,703 8 12 20
Balance March 31, 2020 35 $ 35 10,864,281 $ 2,678 $ 26,451 (19,239 ) $ 9,925

Nine Month Period Ended June 30, 2020


Additional




Total

Preferred Shares

Common Shares

paid-in

Accumulated

shareholders’


Number

Amount

Number

Amount

capital

deficit

equity
Balance at September 30, 2019

35

$
35

10,510,694

$
2,589

$
25,183

$
(17,097)

$
10,710














Adoption of accounting standard

0

0

0

0

0

(128)

(128)

Net loss

0

0

0

0

0

(1,426)

(1,426)
Stock issued in acquisition

—

—

240,000

60

1,073

0

1,133
Stock based compensation

0

0

54,363

14

67

0

81
Balance at December 31, 2019

35

$
35

10,805,057

$
2,663

$
26,323

$
(18,651)

$
10,370

Net loss

—

—

0

0

0

(588)

(588)
Stock based compensation

—

—

26,521

7

116

0

123
Stock option exercises

—

—

32,703

8

12

0

20
Balance at March 31, 2020

35

$
35

10,864,281

$
2,678

$
26,451

$
(19,239)

$
9,925

Net loss

—

—

0

0

0

(879)

(879)
Preferred stock conversion

—

(10)

5,000

1

9

0

0
Stock based compensation

—

—

40,000

11

166

0

176
Stock option exercises

—

—

54,394

13

(8)

0

5
Balance at June 30, 2020

35

$
25

10,963,675

$
2,703

$
26,617

$
(20,118)

$
9,227

The accompanying notes are an integral part of the consolidated financial statements.
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7

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INOTIV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
As Restated, See Note 2
(In thousands)
(Unaudited)

Nine Months Ended

June 30,


2021

2020

Operating activities:





Net income (loss)

$
1,513

$
(2,893)

Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of acquisitions:

Depreciation and amortization

4,087

2,747

Employee stock compensation expense

1,040

380

Changes in deferred taxes

(4,867)

—

Provision for doubtful accounts

50

(131)

Other non-cash operating activities

7

3

Financing lease interest expense

183

200

Changes in operating assets and liabilities:





Accounts receivable

(4,010)

(701)

Inventories

(277)

(395)

Income tax accruals

—

154

Accounts payable

1,306

(2,040)

Accrued expenses

1,594

327

Customer advances

7,451

4,063

Other asset and liabilities, net

(28)

(128)

Net cash provided by operating activities

8,049

1,586





Investing activities:





Capital expenditures

(8,358)

(5,094)

Proceeds from sale of equipment

2

—

Cash paid in acquisitions

(40,698)

(4,000)

Net cash used in investing activities

(49,054)

(9,094)





Financing activities:





Payments on finance lease liability

(277)

(330)

Payments of long-term borrowings

(2,620)

(1,157)

Payments of debt issuance costs

(409)

(111)

Payments on revolving line of credit

—

(25,326)

Borrowings on revolving line of credit

—

24,263

Borrowings on construction loans

—

1,286

Borrowings on capex lines of credit

1,318

2,423

Borrowings on long-term loan

17,087

8,777

Proceeds from exercise of stock options

188

25

Proceeds from issuance of common stock, net

48,972

—

Net cash provided by financing activities

64,259

9,850



Net increase in cash and cash equivalents

23,254

2,342

Cash, cash equivalents, and restricted cash at beginning of period

1,406

606

Cash, cash equivalents, and restricted cash at end of period

$
24,660

$
2,948

Supplemental disclosure of cash flow information:

Cash paid for interest

$
832

$
771

Preclinical Research Services acquisition:

Assets acquired

$
—

$
6,442

Liabilities assumed

—

(1,378)

Common shares issued

—

(1,133)

Cash paid

$
—

$
3,931

Six Months Ended March 31,
2021 2020
Operating activities:
Net loss $ (1,089 ) $ (2,014 )
Adjustments to reconcile net loss to net cash provided by operating activities, net of acquisition:
Depreciation and amortization 2,154 1,673
Amortization finance lease 72 75
Change on operating lease (31 ) 81
Employee stock compensation expense 460 204
Provision for doubtful accounts 72 —
Gain on disposal of property and equipment (1 ) —
Unrealized foreign currency gains 9 5
Financing lease interest expense 137 133
Interest payment true up (3 ) —
Changes in operating assets and liabilities:
Accounts receivable (1,927 ) (1,873 )
Inventories (172 ) (109 )
Income tax accruals — 102
Prepaid expenses and other assets 178 (723 )
Accounts payable 770 (577 )
Accrued expenses 66 (422 )
Customer advances 3,831 3,791
Net cash provided by operating activities 4,526 346
Investing activities:
Capital expenditures (2,427 ) (3,351 )
Proceeds from sale of equipment 2 —
Cash paid in acquisition — (4,000 )
Net cash used in investing activities (2,425 ) (7,351 )

Financing activities:
Payments on finance lease liability (206 ) (212 )
Payments of long-term debt (1,436 ) (603 )
Payments of debt issuance costs (41 ) (111 )
Payments on capex lines of credit (135 ) —
Payments on revolving line of credit — (22,711 )
Borrowings on revolving line of credit — 24,263
Borrowings on construction loans — 1,089
Borrowings on capex lines of credit 387 1,329
Borrowings on long-term loan — 3,533
Proceeds from exercise of stock options 111 20
Change in finance lease (1 ) —
Net cash used/provided by financing activities (1,321 ) 6,597

Net increase in cash and cash equivalents 780 (408 )
Cash, cash equivalents, and restricted cash at beginning of period 1,406 606
Cash, cash equivalents, and restricted cash at end of period $ 2,186 $ 198

Supplemental disclosure of cash flow information:
Cash paid for interest $ 520 $ 494
Preclinical Research Services acquisition:
Assets acquired $ — $ 6,442
Liabilities assumed — (1,378 )
Common shares issued — (1,133 )
Cash  paid $ — $ 3,931
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
8

Table of Contents

INOTIV, INC.
NOTES TO RESTATED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except per share data or as otherwise indicated)
(Unaudited)
Throughout these notes to the restated condensed consolidated financial statements, all referenced amounts for the third quarter of fiscal 2021 reflect the balances and amounts on a restated basis.
1.
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Inotiv, Inc. and its subsidiaries (“We,” “Our,” “Us,” the “Company,” and “Inotiv”) comprise a leading contract research organization specializing in nonclinical and analytical drug discovery and development services. The Company also manufactures scientific instruments for life sciences research, which it sells with related software for use by pharmaceutical companies, universities, government research centers and medical research institutions. The Company’s customers are located throughout the world. On March 18, 2021, the Company filed Articles of Amendment to the Company’s Second Amended and Restated Articles of Incorporation, as amended, and amended its Second Amended and Restated Bylaws, as amended, to reflect a corporate name change from Bioanalytical Systems, Inc. to Inotiv, Inc.
The Company has 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 the Company’s audited consolidated financial statements, and the notes thereto, included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020. In the opinion of management, the condensed consolidated financial statements for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of the Company’s financial position at ~~March 31,~~June 30, 2021. The results of operations for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 may not be indicative of the results for the fiscal year ending September 30, 2021.
Certain reclassifications have been made to prior periods in the unaudited condensed consolidated and combined financial statements and accompanying notes to conform with current presentation.
Costs related to the development and initiation of new service offerings that are not revenue generating at this time are shown on a new line in the condensed consolidated statements of operations identified as Startup costs. These expenses include, but are not limited to, employee compensation expenses, travel expenses, relocation fees, and recruiting expenses. While certain of these costs are one-time in nature, there are certain costs (e.g. employee compensation expenses) that will be expected to recur once the new offerings are revenue generating at which time the related costs will be reclassified on the consolidated statements of operations. Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

2. ~~STOCK-BASED COMPENSATION~~

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Subsequent to the filing of its Form 10-Q, the Company identified an error in its accounting for certain tax attributes related to the acquisition of Bolder BioPATH, Inc. in the Company's third fiscal quarter. The Company should have established a deferred tax liability with an offset to goodwill in connection with the accounting for the opening balance sheet of the acquisition as a result of book-to-tax differences primarily related to the customer relationship intangible and property and equipment identified in the Company’s June 30, 2021 quarterly financial statements. Subsequent to the establishment of the deferred tax liability as of the opening balance sheet, the Company should have reversed a portion of its (i.e. the acquiror) pre-existing valuation allowance and taken the income tax benefit through the statements of operations for the three and nine months ended June 30, 2021.

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The following tables summarize the effects of the restatement on the condensed consolidated balance sheet as of June 30, 2021 and on the condensed consolidated statements of operations for the three and nine months ended June 30, 2021.





As of June 30, 2021 (unaudited)


As Previously Reported

Restated Adjustment

As Restated
Balance Sheet






Total current assets

$
48,062

$
—

$
48,062
Property and equipment, net

44,678

—

44,678
Goodwill

45,750

4,867

50,617
Other noncurrent assets

33,383

—

33,383
Total Assets

$
171,873

$
4,867

$
176,740

Liabilities and shareholders' equity

Total liabilities

$
82,979

$
—

$
82,979
Common shares, 0 par value

3,928

—

3,928
Additional paid-in-capital

110,230

—

110,230
Accumulated deficit

$
(25,264)

$
4,867

$
(20,397)
Total Liabilities and shareholders' equity

$
171,873

$
4,867

$
176,740

Three Months Ended June 30, 2021 (unaudited)


As Previously Reported

Restated Adjustment

As Restated
Total revenue

$
22,892

$
—

$
22,892
Total cost of revenue

15,246

—

15,246
Gross profit

7,646

—

7,646
Total operating expenses

9,349

—

9,349
Operating income (loss)

(1,703)

—

(1,703)
Interest expense

(449)

—

(449)
Other income (expense)

1

—

1
Income tax expense (benefit)

114

(4,867)

(4,753)
Net income (loss)

$
(2,265)

$
4,867

$
2,602

Basic net income (loss) per share

$
(0.15)

$
0.18
Diluted net income (loss) per share

$
(0.15)

$
0.17

Basic weighted average shares outstanding

14,656

—

14,656
Diluted weighted average shares outstanding

14,656

727

15,383

Nine Months Ended June 30, 2021 (unaudited)


As Previously Reported

Restated Adjustment

As Restated
Total revenue

$
59,529

$
—

$
59,529
Total cost of revenue

39,681

—

39,681
Gross profit

19,848

—

19,848
Total operating expenses

22,058

—

22,058
Operating income (loss)

(2,210)

—

(2,210)
Interest expense

(1,163)

—

(1,163)
Other income (expense)

180

—

180
Income tax expense (benefit)

161

(4,867)

(4,706)
Net income (loss)

$
(3,354)

$
4,867

$
1,513

Basic net income (loss) per share

$
(0.27)

$
0.12
Diluted net income (loss) per share

$
(0.27)

$
0.12

Basic weighted average shares outstanding

12,274

—

12,274
Diluted weighted average shares outstanding

12,274

674

12,948

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3. EQUITY

Common Stock Offering

On April 23, 2021, we closed an underwritten public offering of 3,044,117 of our common shares, including 397,058 common shares sold pursuant to the full exercise by the underwriter of its option to purchase additional shares to cover over-allotments. All of the shares were sold at a price to the public of $17.00 per share. Net proceeds from the offering were approximately $49.0 million, after deducting the underwriting discount and estimated offering expenses.

Stock Based Compensation

In March 2008, the Company’s shareholders approved the 2008 Stock Option Plan (the “Plan”) to replace the 1997 Outside Director Stock Option Plan and the 1997 Employee Stock Option Plan. The purpose of the Plan was to promote the Company’s long-term interests by providing a means of attracting and retaining officers, directors and key employees. The Compensation Committee administered the Plan and approved the particular officers, directors or employees eligible for grants. Under the Plan, employees were granted options to purchase common shares at an exercise price equal to the fair market value of the common shares of the end of the trading day prior to the date of the grant. Generally, options granted vest and become exercisable in ~~three~~3 equal installments commencing one year from date of grant and expire upon the earlier of the employee’s termination of employment, or ten years from the date of grant. Restricted shares are valued asat the average of the high and low sale prices of the Company’s common shares on the day prior to the date of the grant. The Plan is described more fully in Note 9 in the Notes to the Consolidated Financial Statements in the Company’s Form 10-K for the fiscal year ended September 30, 2020.

In March 2018, the Company’s shareholders approved the amendment and restatement of the Plan in the form of the Amended and Restated 2018 Equity Incentive Plan and in March 2020 the Company’s shareholders approved a further amendment to increase the number of shares issuable under the amended and restated plan by 700 and to make corresponding changes to the number of shares issuable as incentive options and as restricted stock or pursuant to restricted stock units (as amended, the “Equity Plan”). The Company currently grants equity awards from the Equity Plan. The purpose of the Equity Plan is to promote the Company’s long-term interests by providing a means of attracting and retaining officers, directors and key employees. At ~~March 31,~~June 30, 2021, ~~663~~413 shares remained available for grants under the Equity Plan.

The Company expenses the estimated fair value of stock options over the vesting periods of the grants. The Company recognizes expense for awards subject to graded vesting using the straight-line attribution method. The Company adopted a change in accounting policy effective October 1, 2020 for forfeitures. Prior to October 1, 2020, stock-based compensation expense was reduced for estimated forfeitures, and if necessary, an adjustment was recognized in future periods if actual forfeitures differed from those estimates. The accounting change was made prospectively; therefore, stock-based compensation for equity grants subsequent to October 1, 2020, will not be reduced for estimated forfeitures as expense will be adjusted in the period that a forfeiture occurs. The Company ~~feels~~believes that this accounting change will more accurately account for expense relating to forfeitures. The Company has assessed the cumulative effect of this change in accounting policy and has deemed the impact to be immaterial; therefore, an adjustment has not been recorded to beginning retained earnings. Stock based compensation expense for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 was ~~$278~~$581 and ~~$460,~~$1,040, respectively. Stock based compensation expense for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 was ~~$123~~$176 and ~~$204,~~$380, respectively.

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A summary of the Company’s stock option activity for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 is as follows (in thousands except for share prices):

Options
(shares) Weighted-
Average
Exercise Price
Outstanding – October 1, 2020 712 $ 2.21





Weighted-

Average

Options

Exercise

(shares)

Price
Outstanding - October 1, 2020

712

$
2.21
Granted 43 $ 10.12

295

$
21.72
Exercised (60 ) $ 1.86

(99)

$
1.89
Forfeited (22 ) $ 3.99

(34)

$
3.88
Expired (2 ) $ 2.02

(5)

$
2.03
Outstanding – March 31, 2021 671 $ 2.69

Exercisable at March 31, 2021 392 $ 1.82
Outstanding - June 30, 2021

869

$
8.82


Exercisable at June 30, 2021

387

$
1.93

The weighted average estimated fair value of stock options granted for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 and ~~March 31,~~June 30, 2020 were ~~$6.64~~$13.41 and ~~$3.41,~~$3.08, respectively. The weighted-average assumptions used to compute the fair value of the options granted in the ~~six~~nine months ended ~~March 31,~~June 30, 2021 were as follows:

Risk-free interest rate
0.93
~~0.40~~
%
Dividend yield
0
~~0.00~~
%
Volatility of the expected market price of the Company’s common shares
70.48
~~76.56~~
%
Expected life of the options (years)
5.95
~~5.95~~

As of ~~March 31,~~June 30, 2021, total unrecognized compensation cost related to non-vested stock options was ~~$592~~$3,914 and is expected to be recognized over a weighted-average service period of ~~2.1~~2.7 years.
During the ~~six~~nine months ended ~~March 31,~~June 30, 2021, the Company granted a total of ~~132~~150 restricted shares to members of the Company’s leadership team, including 40 restricted shares granted on December 29, 2020 to the CEO under his employment agreement. A summary of restricted share activity for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 is as follows:

Restricted Shares Weighted-
Average
Grant
Date Fair
Value


Weighted-

Average


Restricted

Grant Date

Shares

Fair Value
Outstanding – September 30, 2020 128 $ 3.88

128

$
3.88
Granted 132 $ 8.74

150

10.50
Vested (10 ) $ 1.28

(10)

1.28
Forfeited (2 ) 6.63

(5)

6.63
Outstanding – March 31, 2021 248 $ 6.54
Outstanding – June 30, 2021

263

$
7.70

As of ~~March 31,~~June 30, 2021, total unrecognized compensation cost related to non-vested restricted shares was ~~$1,193~~$1,360 and is expected to be recognized over a weighted-average service period of ~~1.9~~1.7 years.

3. ~~INCOME (LOSS) PER SHARE~~
4.           INCOME (LOSS) PER SHARE (Restated)
The Company computes basic income (loss) per share using the weighted average number of common shares outstanding. As of March 31, 2021, the Company had two categories of dilutive potential common shares: Series A preferred shares issued in May 2011 in connection with the Company’s registered direct offering and shares issuable upon exercise of options. The Company computes diluted earnings per share using the if-converted method for preferred shares, if any, and the treasury stock method for stock options, respectively. As of June 30, 2021, the Company only had dilutive potential common shares, which related to shares issuable upon exercise of options. Shares issuable upon exercise of ~~671~~869 options were considered in computing diluted income per share for the three and nine months ended June 30, 2021. Shares issuable upon exercise of 751 options and 712 common shares issuable upon conversion of preferred shares were not considered in computing diluted income (loss) per share for the three and ~~six~~nine months ended March 31, 2021 because they were anti-dilutive. Shares issuable upon exercise of 802 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,June 30, 2020 because they were anti-dilutive.

812

Table of Contents

The following table reconciles the computation of basic net ~~loss~~income (loss) per share to diluted ~~loss~~income (loss) per share:


Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020

2021

2020

Basic and diluted net income (loss) per share:









Net income (loss) applicable to common shareholders

$
2,602

$
(879)

$
1,513

$
(2,893)

Weighted average common shares outstanding

Basic

14,656

10,910

12,274

10,807

Diluted

15,383

10,910

12,948

10,807

Basic net income (loss) per share

$
0.18

$
(0.08)

$
0.12

$
(0.27)

Diluted net income (loss) per share

$
0.17

$
(0.08)

$
0.12

$
(0.27)

Three Months Ended
March 31, Six Months Ended
March 31,
2021 2020 2021 2020
Basic net loss per share:
Net loss applicable to common shareholders $ (723 ) $ (588 ) $ (1,089 ) $ (2,014 )
Weighted average common shares outstanding 11,151 10,843 11,083 10,756
Basic net loss per share $ (0.06 ) $ (0.05 ) $ (0.10 ) $ (0.19 )
4. 5.           INVENTORIES
Inventories consisted of the following:

March 31,
2021 September 30,
2020

June 30,

September 30,


2021

2020

Raw materials $ 545 $ 577

$
507

$
577

Work in progress 69 70

77

70

Finished goods 421 230

550

230

1,035 877

1,134

877

Obsolescence reserve (163 ) (177 )

(157)

(177)

$ 872 $ 700

$
977

$
700

5.
6.           SEGMENT INFORMATION
The Company operates in ~~two~~2 principal segments - research services and research products. The Services segment provides research and development support on a contract basis directly to pharmaceutical companies. The Products segment provides liquid chromatography, electrochemical and physiological monitoring products to pharmaceutical companies, universities, government research centers and medical research institutions. The accounting policies of 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 the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020.

Three Months Ended
March 31, Six Months Ended
March 31,
2021 2020 2021 2020

Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020

2021

2020

Revenue: Revenue:









Service $ 17,902 $ 15,191 $ 34,934 $ 27,333

$
21,924

$
14,852

$
56,858

$
42,185

Product 849 821 1,702 1,597

968

913

2,671

2,510

$ 18,751 $ 16,012 $ 36,636 $ 28,930

$
22,892

$
15,765

$
59,529

$
44,695

Operating Income (Loss)

Service $ 3,794 $ 2,575 $ 6,905 $ 3,933

$
3,868

$
2,460

$
10,942

$
6,393

Product (26 ) (200 ) 141 (470 )

61

23

202

(447)

Corporate (4,289 ) (2,570 ) (7,553 ) (4,678 )

(5,632)

(2,960)

(13,354)

(7,638)

$ (521 ) $ (195 ) $ (507 ) $ (1,215 )

$
(1,703)

$
(477)

$
(2,210)

$
(1,692)

Interest expense (366 ) (392 ) (713 ) (703 )

(449)

(382)

(1,163)

(1,085)

Other income 179 10 179 12

1

1

180

13

Loss before income taxes $ (708 ) $ (577 ) $ (1,041 ) $ (1,906 )

$
(2,151)

$
(858)

$
(3,193)

$
(2,764)

6. ~~INCOME TAXES~~

Table of Contents

7. INCOME TAXES (Restated)

The Company uses the asset and liability method of accounting for income taxes. The Company recognizes 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 carry-forwards. The Company measures 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. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. The Company records valuation allowances based on a determination of the expected realization of tax assets.

The difference between the enacted federal statutory rate of 21% and the Company’s effective rate of ~~(4.58)%~~147.39% for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 is due primarily to changes in the valuation allowance on its net deferred tax assets, as well as the impact on tax expense of certain book to tax differences in the basis of indefinite-lived assets.

The Company acquired deferred tax liabilities from Bolder BioPATH Inc., which required the Company to release a portion of its valuation allowance discretely to the quarter.

The Company recognizes 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. The Company measures the amount of the accrual for which an exposure exists as the largest amount of benefit determined on a cumulative probability basis that it believes is more likely than not to be realized upon settlement of the position.

At ~~March 31,~~June 30, 2021 and September 30, 2020, the Company had no0 liability for uncertain income tax positions.

The Company records 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 the effective tax rate. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months.

The Company files income tax returns in the U.S. and several U.S. states. The Company remains subject to examination by taxing authorities in the jurisdictions in which it has filed returns for years after 2014.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, due to the coronavirus pandemic. Among other things, the legislation provides tax relief for businesses. The Company is still assessing the tax benefit, if any, that it could receive under this legislation. The Company received a Payroll Protection Program (“PPP”) loan of $5,051 and applied for forgiveness of $4,851. Based on satisfaction of requirements under the CARES Act for forgiveness, the Company recorded a deferred tax asset for nondeductible expense relating to the PPP funds of $1,276 at September 30, 2020.

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law, clarifying that business expenses paid out of PPP forgivable loan funds may in fact be fully deducted for federal income tax purposes. Based on this clarification in the bill, the Company reversed the $1,276 deferred tax asset related to PPP loan expenses, along with the corresponding valuation allowance for the same amount, as of December 31, 2020.

~~DEBT~~

8. DEBT

Credit Facility

On April 30, 2021, the Company refinanced its credit arrangements with First Internet Bank (“FIB”) in order to, among other things, secure additional debt financing. The discussion below describes our credit arrangements with FIB as of March 31, 2021. For a description of our credit arrangements with FIB as of the April 30, 2021 refinancing, refer to Note 13 “Subsequent Events” to these Notes to Condensed Consolidated Financial Statements.

~~On December 1, 2019,~~ the Company entered into an Amended and Restated Credit Agreement ~~(as had previously been amended from time to time, the “Credit Agreement”~~(the “Credit Agreement”) with ~~FIB. As~~First Internet Bank of ~~March 31, 2021,~~Indiana (“FIB”) to, among other things, secure additional debt financing in order to fund portions of the consideration for the HistoTox Labs Acquisition and the merger of one of the Company’s wholly owned subsidiaries with Bolder BioPATH, Inc. (“Bolder BioPATH”), respectively. The Credit Agreement included ~~five~~11 term loans (the ~~“Initial~~ “Term ~~Loan,~~Loans” ~~“Second Term~~), an equipment draw loan (the “Equipment Loan” ~~“Third Term Loan,” “Fourth Term Loan,”~~), and ~~“Fifth Term Loan,” respectively),~~ a revolving line of credit (the ~~“Revolving Facility”~~“Revolving Facility”),. On May 26, 2021, the Company and FIB entered into an amendment to the Credit Agreement to, among other things, provide a ~~construction draw~~new term loan ~~(the “Construction Draw Loan”), an equipment draw loan (the “Equipment Draw Loan”),~~facility to finance the acquisition and ~~two capital expenditure instruments (the “Initial Capex Line” and~~refurbishment of the ~~“Second Capex Line,” respectively).~~Company’s St. Louis facility, which it had previously leased. The material terms of each of the loans under the Credit Agreement, as amended, are described below.

~~The Initial Term Loan for $4,500 bears interest at~~Included in the Credit Agreement is a requirement that the Company maintain certain financial covenants, including maintaining a senior funded debt to adjusted EBITDA ratio (as defined in the Credit Agreement) of not greater than (i) 5.25 to 1.00 as of the date of the Credit Agreement and as of June 30, 2021, (ii) 4.75 to 1.00 as of September 30, 2021, (iii) 4.50 to 1.00 as of December 31, 2021, (iv) 4.25 to 1.00 as of March 31, 2022, (v) 4.00 to 1.00 as of June 30, 2022, and (vi) 3.50 to 1.00 as of September 30, 2022 and as of each fiscal quarter end thereafter.

Table of Contents

Also included in the Credit Agreement is a requirement that the Company maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of not less than (i) 1.20 to 1.00, commencing as of September 30, 2021, and continuing as of each fiscal quarter end thereafter up to and including June 30, 2022, and (ii) 1.25 to 1.00 as of September 30, 2022 and as of each fiscal quarter end thereafter.

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 obligations of ~~3.99%~~the Company under the Credit Agreement are secured by all of the assets of the Company and are guaranteed by each of its subsidiaries and secured by the assets thereof. The Company has also obtained a life insurance policy in an amount not less than $5,000 for its President and Chief Executive Officer and provided FIB an assignment of such life insurance policy as collateral.

(a) Terms of the Equipment Loan.

The Company may borrow under the Equipment Loan on or before April 30, 2022 in the aggregate principal amount of up to $3,000 (the “Equipment Loan Commitment”). The Equipment Loan Commitment will automatically terminate upon the earlier of (x) any funding of the maximum amount of the Equipment Loan Commitment and (y) 5:00 p.m., ~~with monthly principal and~~Indianapolis time, on April 30, 2022. Until April 30, 2022, the Company must pay interest ~~payments of approximately $33. The Initial Term Loan matures June 23, 2022. The balance~~ on the ~~Initial Term Loan at March 31, 2021 was $3,622. The Company used the proceeds from the Initial Term Loan to satisfy its indebtedness with Huntington Bank and terminated the related interest rate swap.~~

~~The Second Term Loan for $5,500 was used to fund a portion of the cash consideration for the Seventh Wave acquisition. Amounts~~amount outstanding under the Second Term Loan bear interest at a fixed per annum rate of 5.06%, with monthly principal and interest payments equal to $78. The Second Term Loan matures July 2, 2023 and the balance on the Second Term Loan at March 31, 2021 was $3,634.

The Third Term Loan for $1,271 was used to fund the cash consideration for the Smithers Avanza acquisition. Amounts outstanding under the Third Term Loan bear interest at a fixed per annum rate of 4.63%. The Third Term Loan required monthly interest only payments until December 1, 2019, from which time payments of principal and interest in monthly installments of $20 are required, with all accrued but unpaid interest, cost and expenses due and payable at the maturity date. The Third Term Loan matures November 1, 2025 and the balance on the Third Term Loan at March 31, 2021 was $1,018.

~~The Fourth Term Loan in the principal amount of $1,500 has a maturity of June 1, 2025. Interest accrues on the Fourth Term~~Equipment Loan at a fixed ~~per annum~~annual rate ~~equal~~of 4.00%. On April 30, 2022, all amounts outstanding under the Equipment Loan will be converted to ~~4%, with interest payments only having commenced January 1, 2020 through June 1, 2020, with~~a term loan and repaid monthly ~~payments~~in installments of principal ~~and~~based on a five (5) year amortization schedule together with the interest ~~thereafter through maturity. The balance on~~that will accrue thereon. A final installment representing the ~~Fourth Term Loan at March 31, 2021 was $1,286.~~

~~The Fifth Term loan in~~entire unpaid principal of the principal amount of $1,939 has a maturity of December 1, 2024. Interest accrues on the Fifth Term Loan at a fixed per annum rate equal to 4%, with payments of principal and interest due monthly through maturity. The balance on the Fifth Term Loan at March 31, 2021 was $1,858. The Company entered into the Fourth TermEquipment Loan, and ~~the Fifth Term Loan~~all accrued and unpaid interest thereon and all fees and charges in connection ~~with~~therewith, will be due and payable on April 30, 2027. Advances under the ~~PCRS Acquisition.~~Equipment Loan will be used to fund equipment needs of the Company as approved by FIB.

(b) Terms of the Revolving Facility.

The Revolving Facility provides a line of credit for up to $5,000, 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. The Revolving Facility requires monthly accrued and unpaid interest payments only until maturity at a floating per annum rate equal to the greater of (a) 4%4.00%, or (b) the ~~sum of~~Prime Index (as defined in the ~~Prime Rate plus Zero Basis Points (0.0%), which rate shall change concurrently with the Prime Rate.~~Credit Agreement). The Company did not have an outstanding balance on the Revolving Facility as of ~~March 31,~~June 30, 2021. ~~On April 30, 2021, the parties amended~~Advances under the Revolving Facility will be used for general working capital purposes of the Company.

Table of Contents

(c) Terms of the Term Loans:


Principal Amount








as of date of Credit

Monthly

Agreement

Annual

Payment

April 30, 2021

Interest

Amount

Loan Name

(000)

Rate

(000)

Maturity Date

Use of Proceeds
Term Loan 1

$
3,980

5.20
%
$
36

March 28, 2025

Funded expansion of building on real property in Mount Vernon, IN
Term Loan 2

$
3,571

5.06
%
$
78

July 2, 2023

Funded a portion of the cash consideration for the Seventh Wave Laboratories acquisition
Term Loan 3

$
1,076

5.20
%
$
32

March 28, 2025

Funded equipment needs associated with expansion of real property in Mount Vernon, IN
Term Loan 4

$
1,001

4.63
%
$
20

November 1, 2025

Funded the cash consideration for the Smithers Avanza acquisition
Term Loan 5

$
810

4.00
%
$
17

June 30, 2025

Funded certain capital expenditures
Term Loan 6

$
2,865

4.25
%
$
56

December 31, 2025

Funded certain capital expenditures
Term Loan 7

$
1,263

4.00
%
$
28

June 1, 2025

Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 8

$
1,853

4.00
%
$
12

December 1, 2024

Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 9

$
10,000

3.85
%
$
184 ^(a)

April 30, 2026

Funded a portion of the cash consideration of the Bolder BioPATH merger
Term Loan 10

$
5,000

3.85
%
$
92 ^(a)

April 30, 2026

Funded a portion of the cash consideration of the HistoTox Labs acquisition
Term Loan 11

$
3,622

3.99
%
$
33

June 23, 2022

Refinanced debt with The Huntington Bank for general business purposes
Term Loan 12

$
4,832 ^(b)

3.85
%
$
10 ^(c)

December 26, 2026

Financed the acquisition of the St. Louis facility and associated expansion
^(a)See Mandatory Prepayments information below.
^(b)Principal amount as of May 26, 2021.
^(c) The monthly payment amount increases to ~~extend its maturity through April 30, 2023. Refer to Note 13 “Subsequent Events” to these Notes to Condensed Consolidated Financial Statements.~~$29 on January 1, 2022.

~~The Construction Draw Loan and the Equipment Draw Loan were utilized in connection~~(d) Mandatory Prepayments.
Commencing with the Evansville facility expansion and provided for borrowings up to principal amounts not to exceed $4,445 and $1,429, respectively. Amounts outstanding under these loans bear interest at a fixed per annum rate of 5.20%. The Construction Draw Loan and Equipment Draw Loan each mature on March 28, 2025. As of March 31, 2021, there was a $4,015 balance on the Construction Draw Loan and a $1,103 balance on the Equipment Draw Loan.
The Initial Capex Line previously provided for borrowings up to the principal amount of $1,100, which the Company could borrow from time to time, subject to the terms of the Credit Agreement. On March 27, 2020, the parties amended the Initial Capex Line to eliminate the revolving nature of the line in favor of a term loan in the principal amount of $948, equivalent to the amount of borrowings then outstanding on the Initial Capex Line. As amended, the Initial Capex Line matures on Junefiscal year ending September 30, 2025, and as of March 31, 2021, had a balance of $826. Interest accrues on the principal balance of the Initial Capex Line at a fixed per annum rate equal to 4%. The Initial Capex Line requires payments of principal and interest in monthly installments equal to $17.
The Second Capex Line previously provided for borrowings up to the principal amount of $3,000, which the Company could borrow from time to time, subject to the terms of the Credit Agreement. On December 18, 2020, the parties amended the Second Capex Line to eliminate the revolving nature of the line in favor of a term loan in the principal amount of $3,000, equivalent to the amount of borrowings then outstanding on the Second Capex Line. As amended, the Second Capex Line matures on December 31, 2025. Interest accrues on the principal balance of the Second Capex Line at a fixed per annum rate equal to 4.25%. Commencing January 31, 2021 and ~~on the last day of~~for each ~~monthly period~~fiscal year thereafter until ~~and including on~~ the ~~maturity date, the Second Capex Line requires payments of principal and interest~~Term Loan 9 and/or Term Loan 10, in ~~monthly installments equal to $55, and as of March 31, 2021, had a balance of $2,865.~~
~~The Company’s obligations under the Credit Agreement~~each case, are guaranteed by BAS Evansville, Inc. (“BASEV”), Seventh Wave Laboratories, LLC, BASi Gaithersburg LLC, as well as Bronco Research Services LLC (“Bronco”), each a wholly owned subsidiary of the Company (collectively, the “Guarantors”). The Company’s obligations under the Credit Agreement and the Guarantor’s obligations under their respective guaranties are secured by first priority security interestspaid in substantially all of the assets of the Company and the Guarantors, respectively, mortgages on the Company’s BASEV’s and Bronco’s facilities in West Lafayette, Indiana, Evansville, Indiana, and Fort Collins, Colorado, respectively, and pledges of the Company’s ownership interests in its subsidiaries.
~~As amended, (i) beginning March 31, 2021,~~full, the Company is required to ~~maintain~~prepay Term Loan 9 and Term Loan 10 on a ~~Fixed Charge Coverage Ratio~~pro rata basis on the following January 31^st, in an amount equal to 50% of the excess cash flow of the Company (as defined in the Credit Agreement) for such fiscal year (in each case, an “Excess Cash Flow Payment”), provided that, for the fiscal year ending September 30, 2021, the Excess Cash Flow Payment, if any, will be calculated only for the period from April 30, 2021 through September 30, 2021. Excess Cash Flow will be calculated for each fiscal year based on (a) the Company’s adjusted EBITDA (as defined in the Credit Agreement), ~~tested quarterly,~~minus (b) cash interest expense, minus (c) cash taxes paid or cash distributions made for payment of ~~not less than (a) as~~taxes, minus (d) principal payments paid in respect of ~~March 31, 2021 1.05~~long-term indebtedness (excluding any principal reduction on Term Loan 9 or Term Loan 10, in each case, with respect to ~~1.0, (b) as of June 30, 2021 1.10 to 1.00 and (c) as of September 30, 2021 and for each quarter thereafter 1.20 to 1.00 and (ii) the Company is required to maintain a~~Excess Cash Flow ~~Leverage Ratio (as defined in~~and excluding principal payments on the Revolving Facility), minus (e) capital expenditures not funded by advances under the Equipment Loan as specified under the Credit Agreement), tested quarterly, not to (a) as of March 31, 2021, 5.75 to 1.00, (b) as of June 30, 2021, 5.00 to 1.00 and (c) as of September 30, 2021 and for each quarter thereafter, 4.25 to 1.00. The Fixed Charge Coverage Ratio and Cash Flow Leverage Ratio are measured on a trailing twelve (12) month basis, provided, however, that in the case of Fixed Charge Coverage Ratio calculations for the remainder of fiscal 2021 (i) the measurement period for the quarter ending March 31, 2021 includes only the quarter ending March 31, 2021, (ii) the measurement period for the quarter ending June 30, 2021 includes only the quarters ending March 31, 2021 and June 30, 2021 and (iii) the measurement period for the quarter ending September 30, 2021 includes only the quarters ending March 31, 2021, June 30, 2021 and September 30, 2021.
11
Agreement.

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 has also obtained a life insurance policy in an amount of $5,000 for its President and Chief Executive Officer and provided FIB an assignment of such life insurance policy as collateral.Acquisition-related Debt

In addition to the indebtedness under the Credit Agreement, certain of the Company’s subsidiaries have issued unsecured notes as partial payment of the purchase prices of certain acquisitions as described herein. Each of these notes is subordinated to the indebtedness under the Credit Agreement.
As part of the Smithers Avanza acquisition, the ~~Company has~~Company’s BASi Gaithersburg subsidiary issued an unsecured subordinated promissory note payable to the Smithers Avanza seller in the initial principal amount of $810, ~~made by BASi Gaithersburg and~~which is guaranteed by the Company. The promissory note bears interest at a rate of 6.5% per annum with monthly payments of principal and interest and a maturity date of May 1, ~~2022. At March 31, 2021,~~2022 and is guaranteed by the ~~balance on the note payable to the Smithers Avanza seller was $480.~~ Company.

Table of Contents

As part of the PCRS Acquisition, the ~~Company also has~~Company’s Bronco Research Services subsidiary issued an unsecured subordinated promissory note payable to the PCRS seller in the initial principal amount of $800. The promissory note bears interest at a rate of 4.5% per annum with monthly payments of principal and interest and a maturity date of December 1, 2024. ~~At March 31, 2021,~~
As part of the ~~balance on~~acquisition of Boulder BioPATH, the ~~note~~Company’s Inotiv Boulder subsidiary, Inotiv Boulder, LLC, issued unsecured subordinated promissory notes payable to the ~~PCRS seller was $719. In connection with the Merger (as defined below), the Company has also issued seller notes~~former shareholders of Boulder BioPath in an aggregate principal amount of $1,500. ~~Refer to Note 13 “Subsequent Events” to these Notes to Condensed Consolidated Financial Statements.~~The promissory notes bear interest at a rate of 4.5% per annum, with monthly payments of principal and interest and a maturity date of May 1, 2026.

PPP Loan

On April 23, 2020, the Company was granted a loan (the ~~“Loan”~~“PPP Loan”) from Huntington National Bank in the aggregate amount of $5,051, pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The terms of the PPP Loan call for repayment of the principal and accrued interest under the Loan in ~~eighteen~~18 installments of $283 beginning on November 16, 2020 and continuing monthly until the final payment is due on April 16, 2022. However, the bank is not requiring payments of principal or interest pending the loan forgiveness decision. The Company ~~has~~ applied for forgiveness of the loan in the amount of ~~$4,851.~~$4,851, and on July 16, 2021, received notice from Huntington Bank that the SBA had approved the application for forgiveness of the PPP Loan in the full amount requested.

Long term debt as of ~~March 31,~~June 30, 2021 and September 30, 2020 is detailed in the table below.

As of:


June 30, 2021

September 30, 2020
Term Loan #1

$
3,943

$
4,230
Term Loan #2

3,446

4,004
Term Loan #3

1,031

1,266
Term Loan #4

969

1,115
Term Loan #5

781

920
Term Loan #6

2,728

0
Term Loan #7

1,216

1,425
Term Loan #8

1,842

1,891
Term Loan #9

9,850

0
Term Loan #10

4,925

0
Term Loan #11

3,559

3,748
Term Loan #12

2,088

0
Subtotal Term Loans

36,378

18,599
Seller Note – Bolder BioPath

1,500

0
Seller Note – Smithers Avanza

385

650
Seller Note – Preclinical Research Services

702

752
Paycheck protection program loan

5,051

5,051

44,016

25,052
Less: Current portion

(14,752)

(5,991)
Less: Debt issue costs not amortized

(564)

(235)
Total Long-term debt

$
28,700

$
18,826

As of:
March 31,
2021 September 30,
2020
Initial Term Loan $ 3,622 $ 3,748
Second Term Loan 3,634 4,004
Third Term Loan 1,018 1,115
Fourth Term Loan 1,286 1,425
Fifth Term Loan 1,858 1,891
Initial Capex Line 826 920
Second Capex Line 2,865 —
Subtotal Term Loans 15,109 13,103
Construction and Equipment loans 5,119 5,496
Seller Note – Smithers Avanza 480 650
Seller Note – Preclinical Research Services 719 752
Paycheck protection program loan 5,051 5,051
26,478 25,052
Less: Current portion (8,317 ) (5,991 )
Less: Debt issue costs not amortized (235 ) (235 )
Total Long-term debt $ 17,925 $ 18,826

8. 9.           ACCRUED EXPENSES
As part of a fiscal 2012 restructuring, the Company accrued for lease payments at the cease use date for its 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 improvements. Based on these matters, the Company 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 ~~three and six~~nine months ended ~~March 31,~~June 30, 2021, the Company released all of the remaining reserve for lease related liabilities. At ~~March 31,~~June 30, 2021 and September 30, 2020, respectively, the Company had $0 and $168 reserved for the remaining liability. The reserve was classified as a current liability on the condensed consolidated balance sheets as of September 30, 2020.

9.	Table of Contents 10. NEW ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument” “CECL”). ASU 2016-13 requires an allowance for expected credit losses on financial assets to be recognized as early as day one of the instrument. This ASU departs from the incurred loss model which means the probability threshold is removed. It considers more forward-looking information and requires the entity to estimate its credit losses as far as it can reasonably estimate. This update became effective for the Company on October 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

11. BUSINESS COMBINATIONS (Restated)

~~10.~~

~~BUSINESS COMBINATIONS~~

The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired, and liabilities assumed to be valued at their fair market values at the acquisition date. The guidance further provides that: (1) in-process research and development will be recorded at fair value as an indefinite-lived intangible asset; (2) acquisition costs will generally be expensed as incurred, (3) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and (4) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. ASC 805 requires that any excess of purchase price over fair value of assets acquired, including identifiable intangibles and liabilities assumed, be recognized as goodwill.

PCRS acquisition

Overview

On November 8, 2019, the Company and Bronco Research Services LLC, a wholly owned subsidiary of the Company (the “PCRS Purchaser”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Pre-Clinical Research Services, Inc., a Colorado corporation (the “PCRS Seller”), and its shareholder. Pursuant to the Purchase Agreement, on December 1, 2019, the Company indirectly acquired (the “PCRS Acquisition”) substantially all of the assets of PCRS Seller used or useful by PCRS Seller in connection with PCRS Seller's provision of GLP and non-GLP preclinical testing for the pharmaceutical and medical device industries. The total consideration for the PCRS Acquisition was $5,857, which consisted of $1,500 in cash, subject to certain adjustments, 240 of the Company’s common shares valued at $1,133 using the closing price of the Company’s common shares on November 29, 2019 and an unsecured promissory note in the initial principal amount of $800 made by PCRS Purchaser. The promissory note bears interest at 4.5%. The Company also purchased certain real property located in Fort Collins, Colorado, comprising the main facility for the PCRS Seller’s business and additional property located next to the facility available for future expansion, for $2,500. The Company funded the cash portion of the purchase price for the PCRS Acquisition with cash on hand and the net proceeds from ~~the refinancing of~~ its credit arrangements with ~~FIB, as described in Note 7.~~FIB. As contemplated by the Purchase Agreement, the Company also entered into a lease arrangement for an ancillary property used by Seller’s business, located in Livermore, Colorado.

Table of Contents

Accounting for the Transaction
Results are included in the Company’s results from the acquisition date of December 1, 2019.
The Company’s allocation of the $5,857 purchase price to PCRS Purchaser’s tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values as of December 1, 2019, is included in the table below. Goodwill, which is derived from the enhanced scientific expertise, expanded client base and our ability to provide broader service solutions through a comprehensive portfolio, is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and is deductible for tax purposes. The purchase price allocation as of ~~March 31,2021~~June 30, 2021 is as follows:

Allocation as of

June 30, 2021
Assets acquired and liabilities assumed:

Receivables

$
578
Property and equipment

2,836
Unbilled receivables

162
Prepaid expenses

27
Intangible assets

2,081
Goodwill

751
Accounts payable

(109)
Accrued expenses

(118)
Customer advances

(351)

$
5,857
Allocation as of
March 31, 2021
Assets acquired and liabilities assumed:
Receivables $ 578
Property and equipment 2,836
Unbilled receivables 162
Prepaid expenses 27
Intangible assets 2,081
Goodwill 751
Accounts payable (109 )
Accrued expenses (118 )
Customer advances (351 )
$ 5,857

The allocation of the purchase price is based on valuations performed to determine the fair value of such assets and liabilities as of the acquisition date. Goodwill from this transaction is allocated to the Company’s Services segment. PCRS Purchaser recorded revenues of ~~$3,813~~$5,191 and net income of ~~$711~~$117 for the ~~six~~nine month period ending ~~March 31,~~June 30, 2021.
HistoTox Labs acquisition
Overview
On April 30, 2021, the Company completed the acquisition of HistoTox Labs, Inc. (“HistoTox Labs”) in a cash transaction. HistoTox Labs is a provider of services in connection with non-clinical consulting, laboratory and strategic support services and products related to routine and specialized histology, immunohistology, histopathology and image analysis/digital pathology. Consideration for the HistoTox Labs Acquisition consisted of $22,321 in cash. The purchase price is preliminary and subject to working capital and customary purchase price adjustments under the Purchase Agreement.
We recognized transaction costs related to the acquisition of HistoTox Labs of $449 and $560 for the three and nine months ended June 30, 2021. These costs were associated with legal and professional services related to the acquisition and are reflected within general and administrative expenses in our condensed consolidated statement of operations.
HistoTox Labs and Bolder BioPATH (discussed below) were combined into 1 business unit and recorded combined revenues of $4,251 and combined net income of $585 for the three and nine month periods ending June 30, 2021.
The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2021. The purchase price allocation is preliminary and subject to change, including the valuation of property and equipment, intangible assets, income taxes and goodwill, among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value.

Table of Contents

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

Preliminary

Allocation as of

June 30, 2021
Assets acquired and liabilities assumed:

Receivables

1,020
Prepaid expenses

40
Operating lease ROU

2,239
Property and equipment

4,021
Intangible assets

8,500
Other Assets

35
Goodwill

9,386
Accounts payable

(128)
Customer advances

(553)
Operating lease liability

(2,239)

$
22,321

Property and equipment is mostly composed of equipment (including lab equipment, furniture and fixtures, and computer equipment). The fair value of property and equipment was determined using a combination of cost and market-based methodologies. The fair value of intangible assets as of June 30, 2021 is based on preliminary assumptions which are subject to change as we complete our valuation procedures.
Intangible assets primarily relate to customer relationships and a non-compete agreement. The acquired definite-lived intangible assets are being amortized over a weighted-average estimated useful life of approximately 8 years for customer relationships and 5 years for the non-compete agreement on a straight-line basis. The estimated fair values of identifiable intangible assets were determined using the "income approach," which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product (including revenues, cost of services, marketing, selling and administrative expenses, and contributory asset charges), the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, and competitive trends impacting the asset and each cash flow stream, as well as other factors. The fair value of intangible assets as of June 30, 2021 is based on preliminary assumptions which are subject to change as we complete our valuation procedures.
Goodwill, which is derived from the enhanced scientific expertise, expanded client base and our ability to provide broader service solutions through a comprehensive portfolio, is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and $10,804 is deductible for tax purposes. Goodwill from this transaction is allocated to the Company’s Services segment. Goodwill is reviewed for impairment at least annually and when certain impairment indicators are present. As of June 30, 2021, there were 0 goodwill impairment losses.
Bolder BioPATH acquisition
Overview
On May 3, 2021, the Company completed the acquisition of Bolder BioPATH in a merger of Bolder BioPATH with a wholly owned subsidiary of the Company. Bolder BioPATH is a provider of services specializing in in vivo models of rheumatoid arthritis, osteoarthritis, and inflammatory bowel disease as well as other autoimmune and inflammation models. Consideration for the Bolder BioPATH acquisition consisted of (i) $18,500 in cash, subject to customary purchase price adjustments and inclusive of $1,250 being held in escrow for purposes of securing any amounts payable by the selling parties on account of indemnification obligations, purchase price adjustments, and other amounts payable under the merger agreement, (ii) 1,588 of the Company’s common shares valued at $34,452 using the closing price of the Company’s common shares on May 3, 2021 and (iii) seller notes in an aggregate principal amount of $1,500.

Table of Contents

We recognized transaction costs related to the acquisition of Bolder BioPATH of $450 and $568 for the three and nine months ended June 30, 2021. These costs were associated with legal and professional services related to the acquisition and are reflected within general and administrative expenses in our condensed consolidated statement of operations.
The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2021. The purchase price allocation is preliminary and subject to change, including the valuation of property and equipment, intangible assets, income taxes and goodwill, among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value.
The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

Preliminary

Allocation as of

June 30, 2021
Assets acquired and liabilities assumed:

Cash and cash equivalents

$
124
Receivables

2,278
Unbilled receivables

1,867
Prepaid expenses

103
Operating lease ROU

2,750
Property and equipment

6,609
Intangible assets

12,500
Other assets

70
Goodwill

36,863
Accounts payable

(93)
Accrued expenses

(279)
Deferred revenue

(723)
Deferred tax liability

(4,867)
Operating lease liability

(2,750)

$
54,452

Property and equipment is mostly composed of equipment (including lab equipment, furniture and fixtures, and computer equipment). The fair value of property and equipment was determined using a combination of cost and market-based methodologies. The fair value of intangible assets as of June 30, 2021 is based on preliminary assumptions which are subject to change as we complete our valuation procedures.
Intangible assets primarily relate to customer relationships. The acquired definite-lived intangible assets are being amortized over a weighted-average estimated useful life of approximately 8 years on a straight-line basis. The estimated fair values of identifiable intangible assets were determined using the "income approach," which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product (including revenues, cost of services, marketing, selling and administrative expenses, and contributory asset charges), the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, and competitive trends impacting the asset and each cash flow stream, as well as other factors. The fair value of intangible assets as of June 30, 2021 is based on preliminary assumptions which are subject to change as we complete our valuation procedures.
Goodwill, which is derived from the enhanced scientific expertise, expanded client base and our ability to provide broader service solutions through a comprehensive portfolio, is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and none is deductible for tax purposes. Goodwill from this transaction is allocated to the Company’s Services segment. Goodwill is reviewed for impairment at least annually and when certain impairment indicators are present. As of June 30, 2021, there were 0 goodwill impairment losses.

Table of Contents

Pro Forma Results
The Company’s unaudited pro forma results of operations for the ~~six~~three and nine months ended ~~March 31,~~June 30, 2021 and June 30, 2020, assuming the PCRS ~~Acquisition~~and HistoTox Labs acquisitions and the merger of Bolder BioPATH had occurred as of October 1, 2019 are presented for comparative purposes below. These amounts are based on available information of the results of operations of the PCRS, ~~Seller’s~~HistoTox Labs, and Bolder BioPATH operations prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the ~~PCRS Acquisition~~acquisitions and the merger been completed on October 1, 2019.
The unaudited pro forma information is as follows:

Six Months Ended
March 31, 2020
Total revenues $ 29,847

Net loss (1,887 )

Pro forma basic net loss per share $ (0.17 )
Pro forma diluted net loss per share $ (0.17 )

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Total revenues
$
24,786

$
21,448

$
72,789

$
62,661









Net income (loss)

(1,847)

5,242

(428)

5,863









13

~~11.~~

12.         REVENUE RECOGNITION
In accordance with Accounting Standards Codification (“ASC”) 606, the Company disaggregates its revenue from clients into three revenue streams, service revenue, product revenue, and royalties. At contract inception the Company assesses the services promised in the contract with the clients to identify performance obligations in the arrangements.

Service revenue

The Company enters into contracts with clients to provide drug discovery and development services with payments based on mainly fixed-fee arrangements. The Company also offers archive storage services to its clients.

The Company’s fixed fee arrangements may involve nonclinical research services (toxicology, pathology, pharmacology), 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 in-life study conduct, 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 sheets. 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 include one performance obligation. Amounts related to future archiving or prepaid archiving contracts for clients 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 clients and have alternative use. Both the transaction sales price and shipping terms are agreed upon in the client order. For these products, all revenue is recognized at a point in time, generally when title of the product and control is transferred to the client based upon shipping terms. These arrangements typically include only one performance obligation. Certain products have maintenance agreements available for clients to purchase. These are typically billed in advance and are accounted for as deferred revenue, are recognized ratably over the applicable maintenance period and are included in customer advances on the condensed consolidated balance sheet.

Royalty revenue

Table of Contents

The Company has an agreement with Teva Pharmaceuticals (formerly Biocraft Laboratories, Inc,) which manufactures and markets pharmaceutical products. The Company receives royalties in accordance with sales of certain pharmaceuticals that Teva manufactures and sells. The royalties are received on a quarterly basis and the revenue is recognized over the quarter. Royalty revenue is included in service revenue on the condensed consolidated statement of operations. Total revenue recognized was ~~$94~~$102 and ~~$179~~$131 in the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively. Total revenue recognized was ~~$153~~$255 and ~~$436~~$567 in the ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020, respectively.

The following table presents changes in the Company’s contract assets and contract liabilities for the ~~six~~nine months ended ~~March 31,~~June 30, 2021.

Balance at
September 30,
2020 Additions Deductions Balance at
March 31,
2021

Balance at

Balance at

September 30,

June 30,


2020

Additions

Deductions

2021
Contract Assets: Unbilled receivables $ 1,879 $ 1,371 $ (857 ) $ 2,393

$
1,879

$
3,963

$
(1,848)

$
3,994
Contract liabilities: Customer advances $ 11,392 $ 77,700 $ (73,906 ) $ 15,186

$
11,392

$
125,225

$
(116,648)

$
19,969

~~12.~~

13.         LEASES
The Company records a right-of-use (“ROU”) asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASU 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for the leases on a straight-line basis over the lease term. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.
14
The Company has various operating and finance leases for facilities and equipment. Facilities leases provide office, laboratory, warehouse, or land, the company uses to conduct its operations. Facilities leases range in duration from two to ten years, with either renewaloptions for additional terms as the initial lease term expires, or purchase options. Facilities leases are considered as either operating or financing leases.
Equipment leases provide for office equipment, laboratory equipment or services the Company uses to conduct its operations. Equipment leases range in duration from 30 to 60 months, with either subsequentannual renewals, additional terms as the initial lease term expires, or purchase options.
Right-of-use lease assets and lease liabilities that are reported in the Company’s condensed consolidated balance sheets are as follows:

As of

As of


June 30, 2021

September 30, 2020
Operating right-of-use assets, net

$
8,695

$
4,001

Current portion of operating lease liabilities

1,916

866
Long-term operating lease liabilities

6,884

3,344
Total operating lease liabilities

$
8,800

$
4,210

Finance right-of-use assets, net

$
66

$
4,778

Current portion of finance lease liabilities

29

4,728
Long-term finance lease liabilities

39

44
Total finance lease liabilities

$
68

$
4,772
As of As of
March 31,
2021 September 30,
2020
Operating right-of-use assets, net $ 4,105 $ 4,001

Current portion of operating lease liabilities 1,004 866
Long-term operating lease liabilities 3,278 3,344
Total operating lease liabilities $ 4,282 $ 4,210

Finance right-of-use assets, net $ 4,710 $ 4,778

Current portion of finance lease liabilities 4,664 4,728
Long-term finance lease liabilities 42 44
Total finance lease liabilities $ 4,706 $ 4,772

During the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021, the Company had operating lease amortizations of ~~$242~~$292 and ~~$474,~~$736, respectively, and had finance lease amortization of ~~$35~~$25 and ~~$72,~~$97, respectively. Finance lease interest recorded in the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 was ~~$68~~$46 and ~~$137,~~$183, respectively.
~~One~~NaN of the operating leases contains a variable lease component based on revenue for ~~one~~1 component of the Company. The total variable payments for this lease for the three and ~~six~~nine months ended ~~March 31, 2021was $69~~June 30, 2021 were $31 and ~~$145.~~$177, respectively.

Table of Contents

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense related to the Company’s leases for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 were:

Three months ended Six months ended
March 31, 2021 March 31, 2021


Three months ended

Nine months ended

June 30, 2021

June 30, 2021

Operating lease costs:



Fixed operating lease costs $ 242 $ 474

$
292

$
736

Short-term lease costs 42 52

32

66

Lease income (159 ) (318 )

(159)

(477)

Finance lease costs:

Amortization of right-of-use asset expense 35 72

25

97

Interest on finance lease liability 68 137

46

183

Total lease cost $ 228 $ 417

$
236

$
605

The Company serves as lessor to a lessee in ~~one~~1 facility through the end of calendar year 2024. The gross rental income and underlying lease expense are presented gross in the Company’s condensed consolidated balance ~~sheet.~~sheets. The Company received rental income of $159 and ~~$318~~$477 for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021, respectively.
Supplemental cash flow information related to leases was as follows:

Three months Ended Six months Ended
March 31, 2021 March 31, 2021


Three months ended

Nine months ended

June 30, 2021

June 30, 2021

Cash flows included in the measurement of lease liabilities:



Operating cash flows from operating leases $          240 $ 469

$
346

$
867

Operating cash flows from finance leases 68 137

45

183

Finance cash flows from finance leases 103 206

71

277

Non-cash lease activity:

Right-of-use assets obtained in exchange for new operating lease liabilities $ 772 $ 1,175

$
4,990

$
6,165

Right-of-use assets obtained in exchange for new finance lease liabilities 9 —

8

17

14

The weighted average remaining lease term and discount rate for the Company’s operating and finance leases as of ~~March 31,~~June 30, 2021 were:

~~As of~~

~~March 31, 2021~~
As of

June 30, 2021

Weighted-average remaining lease term (in years)

Operating lease
4.91
~~4.49~~
Finance lease
3.43
~~0.37~~
Weighted-average discount rate (in percentages)

Operating lease
4.46
~~5.24~~
%
Finance lease
4.86
~~5.82~~
%

Lease duration was determined utilizing renewal options that the Company is reasonably certain to execute.
As of ~~March 31,~~June 30, 2021, maturities of operating and finance lease liabilities for each of the following five years and a total thereafter were as follows:


Operating Leases

Finance Leases
2021 (remainder of fiscal year)

$
496

$
6
2022

2,001

24
2023

2,022

18
2024

1,998

18
2025

1,494

7
Thereafter

1,800

1
Total minimum future lease payments

9,811

74
Less interest

(1,011)

(6)
Total lease liability

8,800

68

Operating Leases Finance Leases
2021 (remainder of fiscal year) $ 522 $ 4,777
2022 1,069 22
2023 1,113 16
2024 1,231 16
2025 393 5
Thereafter 494 -
Total minimum future lease payments 4,822 4,836
Less interest (540 ) (130 )
Total lease liability 4,282 4,706
~~13.~~ ~~SUBSEQUENT EVENTS (Amounts not in thousands)~~

Table of Contents

14.SUBSEQUENT EVENTS

On ~~April 13,~~July 9, 2021, the Company ~~and Inotiv - Boulder HTL, LLC,~~closed a ~~wholly owned subsidiary of the Company (”Inotiv – Boulder HTL”), entered into an Asset~~ Purchase Agreement (the “Purchase Agreement”) ~~with HistoTox Labs, Inc.,~~between BioReliance Corporation, a ~~Colorado~~Delaware corporation ~~(the “HistoTox Labs”~~("BioReliance") and BASi Gaithersburg LLC (“BASi Gaithersburg”), and its stockholder. On April 30, 2021, the Company closed the transactions contemplated by the Purchase Agreement, indirectly acquiring (the “HistoTox Labs Acquisition”) substantially all of the assets of HistoTox Labs used or useful by HistoTox Labs in connection with HistoTox Labs’ business of non-clinical consulting, laboratory and strategic support services and products related to routine and specialized histology, immunohistology, histopathology and image analysis/digital pathology. Consideration for the HistoTox Labs Acquisition consisted of $22.0 million in cash, subject to certain adjustments and inclusive of a $1.65 million escrow for purposes of securing any amounts payable by the selling parties on account of indemnification obligations and other amounts payable under the Purchase Agreement. In addition, Inotiv – Boulder HTL assumed certain specified liabilities of HistoTox Labs.

On April 15, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Rock Mergeco, Inc., a Colorado corporation and a wholly-owned subsidiary of the Company, Inotiv Boulder, LLC, an Indiana limited liability company and ~~a wholly-owned~~wholly owned subsidiary of the Company. The acquisition related to certain assets of BioReliance in order to expand our genetic toxicology offering to build and lead the genetic toxicology business. Consideration for the acquisition consisted of sales royalties of 10% in connection with future net sales related to the acquisition from the date of the acquisition through December 31, 2023.

On July 15, 2021, the Company ~~(“Inotiv Boulder”), Bolder BioPATH, Inc., a Colorado corporation (“Bolder BioPATH”),~~announced the acquisition of laboratory instrumentation to accelerate the startup and development of laboratory services pursuing cell and gene therapy as well as traditional biotherapeutics and immunotherapies. We acquired the ~~holders~~assets for approximately $1,300.

On July 16, 2021, the Company received notice from Huntington Bank that the SBA had approved the Company’s application for forgiveness of its PPP Loan in the amount of $4,851.

On August 2, 2021, the Company closed the purchase of all of the outstanding ~~common shares~~equity interest in Gateway Pharmacology Laboratories LLC, a Missouri company engaged in the business of ~~Bolder BioPATH (the “Selling Shareholders”). On April 30, 2021, the Company closed (the “Closing”) the transactions contemplated by the Merger Agreement~~providing drug metabolism and the merger under the Merger Agreement was consummated on May 3, 2021 (the “Merger”). Following the Merger, Inotiv Boulder, as the surviving wholly owned subsidiary of the Company, serves as a contract pharmacologypharmacokinetics DMPK) technology and ~~pathology company specializing in in vivo models of rheumatoid arthritis, osteoarthritis, and inflammatory bowel disease~~capability, as well as ~~other autoimmune~~a new cell and ~~inflammation models.~~

Asmolecular biology suite capable of delivering in vitro solutions in pharmacology and toxicology early in drug discovery. Consideration for the ~~Closing, the Company paid consideration to the Selling Shareholders, consisting~~acquisition consisted of (i) ~~$18.5 million~~$1,400 in cash, subject to customary purchase price adjustments, and inclusive of $1.25 million being held in escrow for purposes of securing any amounts payable by the selling parties on account of indemnification obligations, purchase price adjustments, and other amounts payable under the Merger Agreement, (ii) ~~1,588,235~~45,323 of the Company’s common shares ~~and (iii) seller notes in an aggregate principal amount~~valued at $1,250.

Table of ~~$1.5 million.~~

On April 23, 2021, the Company closed an underwritten public offering of 3,044,117 of its common shares, including 397,058 common shares sold pursuant to the full exercise by the underwriter of its option to purchase additional shares to cover over-allotments. All of the shares were sold at a price to the public of $17.00 per share. Net proceeds to the Company from the offering were approximately $49.0 million, after deducting the underwriting discount and estimated offering expenses, a portion of which net proceeds were used to fund parts of the cash consideration under the HistoTox Labs Acquisition and the Merger.

~~On April 30, 2021, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with First Internet Bank of Indiana (“FIB~~”) to, among other things, secure additional debt financing in order to fund portions of the consideration for the HistoTox Labs Acquisition and the Merger, respectively. The Credit Agreement includes eleven term loans (the “~~Term Loans” ), an equipment draw loan (the “Equipment Loan”), and a revolving line of credit (the “Revolving Facility~~”). The terms of each such loans are set forth below. The obligations of the Company under the Credit Agreement are secured by all of the assets of the Company and are guaranteed by each of its subsidiaries and secured by the assets thereof.

Included in the Credit Agreement is a requirement that the Company maintain certain financial covenants, including maintaining a senior funded debt to adjusted EBITDA ratio (as defined in the Credit Agreement) of not greater than (i) 5.25 to 1.00 as of the date of the Credit Agreement and as of June 30, 2021, (ii) 4.75 to 1.00 as of September 30, 2021, (iii) 4.50 to 1.00 as of December 31, 2021, (iv) 4.25 to 1.00 as of March 31, 2022, (v) 4.00 to 1.00 as of June 30, 2022, and (vi) 3.50 to 1.00 as of September 30, 2022 and as of each fiscal quarter end thereafter.

15Contents

~~(a) Terms of the Equipment Loan~~.

~~The Company may borrower under the Equipment Loan on or before April 30, 2022 in the aggregate principal amount of up to $3.0 million (the “Equipment Loan Commitment~~”). The Equipment Loan Commitment shall automatically terminate upon the earlier of (x) any funding of the maximum amount of the Equipment Loan Commitment and (y) at 5:00 p.m., Indianapolis time, April 30, 2022. Until April 30, 2022, the Company must pay interest on the amount outstanding under the Equipment Loan at a fixed annual rate of 4.00%. On April 30, 2022, all amounts outstanding under the Equipment Loan shall be converted to a term loan and repaid monthly in installments of principal based on a five (5) year amortization schedule together with the interest that shall accrue thereon. A final installment representing the entire unpaid principal of the Equipment Loan, and all accrued and unpaid interest thereon and all fees and charges in connection therewith, shall be due and payable on April 30, 2027. Advances under the Equipment Loan shall be used to fund equipment needs of the Company as approved by FIB.

~~(b) Terms of the Revolving Facility.~~

The Revolving Facility provides a line of credit for up to $5.0 million, 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. The Revolving Facility requires monthly accrued and unpaid interest payments only until maturity at a floating per annum rate equal to the greater of (a) 4%, or (b) the sum of the Prime Rate plus Zero Basis Points (0.0%), which rate shall change concurrently with the Prime Rate. The Company did not have an outstanding balance on the Revolving Facility as of the effective date of the Credit Agreement. Advances under the Revolving Facility shall be used for general working capital purposes of the Company.

~~(c) Terms of the Term Loans:~~

Loan Name Principal
Amount as of
date of Credit
Agreement Annual
Interest
Rate Monthly
Payment
Amount
(000) Maturity Date Use of Proceeds
Term Loan 1 $3.980 million 5.20 % $ 36 March 28, 2025 Funded expansion of building on real property in Mount Vernon, IN
Term Loan 2 $3.571 million 5.06 % $ 78 July 2, 2023 Funded a portion of the cash consideration for the Seventh Wave Laboratories acquisition
Term Loan 3 $1.076 million 5.20 % $ 32 March 28, 2025 Funded equipment needs associated with expansion of real property in Mount Vernon, IN
Term Loan 4 $1.001 million 4.63 % $ 20 November 1, 2025 Funded the cash consideration for the Smithers Avanza acquisition
Term Loan 5 $810 thousand 4.00 % $ 17 June 30, 2025 Funded certain capital expenditures
Term Loan 6 $2.865 million 4.25 % $ 56 December 31, 2025 Funded certain capital expenditures
Term Loan 7 $1.263 million 4.00 % $ 28 June 1, 2025 Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 8 $1.853 million 4.00 % $ 12 December 1, 2024 Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 9 $10.000 million 3.85 % $ 184 * April 30, 2026 Funded a portion of the cash consideration of the Merger
Term Loan 10 $5.000 million 3.85 % $ 92 * April 30, 2026 Funded a portion of the cash consideration of the HistoTox Labs Acquisition
Term Loan 11 $3.622 million 3.99 % $ 33 June 23, 2022 Refinanced debt with The Huntington Bank for general business purposes
*See Mandatory Prepayments information below
16
~~(d) Mandatory Prepayments.~~
Commencing with the fiscal year ending September 30, 2021 and for each fiscal year thereafter until the Term Loan 9 and/or Term Loan 10, in each case, are paid in full, the Company shall prepay Term Loan 9 and Term Loan 10 on a pro rata basis on the following January 31^st~~, in an amount equal to 50% of the excess cash flow of the Company (as defined in the Credit Agreement) for such fiscal year (in each case, an “Excess Cash Flow Payment~~”), provided that for the fiscal year ending September 30, 2021 the Excess Cash Flow Payment, if any, shall be calculated only for the period from April 30, 2021 through September 30, 2021. Excess Cash Flow shall be calculated for each fiscal year based on (a) the Company’s adjusted EBITDA (as defined in the Credit Agreement), minus (b) cash interest expense, minus (c) cash taxes paid or cash distributions made for payment of taxes, minus (d) principal payments paid in respect of long-term indebtedness (excluding any principal reduction on Term Loan 9 or Term Loan 10, in each case, with respect to Excess Cash Flow and excluding principal payments on the Revolving Facility), minus (e) capital expenditures not funded by advances under the Equipment Loan as specified under the Credit Agreement.
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 has also obtained a life insurance policy in an amount not less than $5.0 million for its President and Chief Executive Officer and provided FIB an assignment of such life insurance policy as collateral.
In addition to the financing arrangements described above, the Company has secured a commitment for approximately $5.0 million of additional debt financing from FIB to be used in connection with the exercise of the Company’s option to buy our St. Louis facility for approximately $4.7 million and to complete associated expansion, contingent on the Company’s receipt of related business incentives.
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in this Item 2 has been revised to reflect the restatement occurring subsequent to the filing of the original Form 10-Q.

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 services and products; (iii) trends in the industries that consume our services and products; (iv) our ability to develop or acquire new services and products; (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 related to recent acquisitions; (ix) our ability to effectively manage current expansion efforts or any future expansion or acquisition initiatives undertaken by us; (x) our ability to develop and build infrastructure and teams to manage growth and projects; (xi) our ability to continue to retain and hire key talent; (xii) our ability to market our services and products under our corporate name and relevant brand names; (xiii) our ability to service our outstanding indebtedness, (xiv) our expectations regarding the volume of new bookings, pricing, gross profit margins and liquidity, (xv) our ability to manage recurring and non-recurring costs, (xvi) the impact of COVID-19 on the economy, demand for our services and products and our operations, including the measures taken by governmental authorities to address the pandemic, which may precipitate or exacerbate other risks and/or uncertainties, and additional risks set forth in our filings with the Securities and Exchange Commission (the “SEC”). Actual results may differ materially from those in the forward-looking statements as a result of various factors, including but not limited to the risk factors disclosed in our reports with the SEC, 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, 2020. 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
During recent periods, we have undertaken significant internal and external growth ~~initiatives.~~initiatives to reposition our Company and provide a platform for future growth. Our growth initiatives include (1) acquisitions, (2) expansion of existing and acquired businesses, (3) startup of new services. Through ~~March 31,~~June 30, 2021, we acquired the business of Seventh Wave Laboratories, LLC, in July 2018 (the “Seventh Wave Acquisition”), ~~undertook the expansion of our facilities in Evansville, Indiana, which we began using for operations in March of 2020,~~ acquired the toxicology business of Smithers Avanza on May 1, 2019 (the “Smithers Avanza Acquisition”), acquired the preclinical testing business of Pre-Clinical Research Services, as well as related real property, on December 1, 2019 (the “PCRS Acquisition”), acquired the business of HistoTox Labs on April 30, 2021 (the “HistoTox Acquisition”) and completed a merger of one of its wholly owned subsidiaries with Bolder BioPATH on May 3, 2021 (the “Merger”). Following the end of the quarter, we completed the purchase of all of the outstanding equity interests in Gateway Pharmacology Laboratories on August 2, 2021. We undertook an expansion of our facilities in Evansville, Indiana, which we began using for operations in March of 2020, we recently completed capital improvements to our Ft. Collins facility to facilitate growth, and in May 2021 we announced the buyout of our St. Louis facility with the build-out of an additional 20,000 square feet of wet laboratory and office space. We announced new service offerings which we are building internally and start up operations such as: clinical pathology; SEND data reporting; cardiovascular safety pharmacology; genetic toxicology; biotherapeutics; and medical devise histology and pathology. On April 23, 2021, we completed a public offering of our common stock and obtained funding to support these initiatives and other improvements to our laboratories, facilities and equipment in order to support future growth and enhance our scientific capabilities, client service offerings and client experiences. In addition, we have made other significant investments in upgrading facilities and equipment ~~added additional services to provide our clients~~ and filled critical leadership and scientific positions. ~~Among other undertakings subsequent to March 31, 2021, we acquired two additional businesses and completed a public offering or our common shares and a refinancing~~

Table of our credit arrangements with First Internet Bank to fund portions of the cash consideration for the business acquisitions and to support other corporate initiatives. Refer to the discussions below and in Note 13 “Subsequent Events” to the Notes to Condensed Consolidated Financial Statements.Contents

Over the last year, we have also improved our infrastructure and platform to support future growth and additional potential acquisitions. These improvements included establishing our new corporate name Inotiv, Inc., ~~installing new accounting software systems,~~ investments in our information technology platforms, building program management functions to enhance management and communication with clients and multi-site programs, further ~~enhancements to~~enhancing client services and improving the client experience. We believe these internal infrastructure initiatives, investments, acquisitions, mergers and recruiting efforts, combined with our existing team and the continuing development of our sales and marketing team, have led and will continue to lead to growth in revenue and the ability to improve the service offerings to our clients. We recognize the recent investments in growth, continuing development of a strong leadership team, improving our platform, recruiting new employees, enhancing and building our scientific strength and adding services are critical to meeting the future expectations of our clients, employees and shareholders. We believe the actions taken and investments made in recent periods form a solid foundation upon which we can build.

Significant Accomplishments during ~~three~~nine months ended ~~March 31,~~June 30, 2021

Announcement of an initiative to broaden clinical pathology service offerings

Appointment of Greg Beattie as Chief Operating Officer

~~Announcement of investments~~

Investments in laboratory infrastructure, data and study management technologies and internal expertise for SEND (Standard for Exchange of Nonclinical Data) capabilities

~~Announcement of investments~~

Investments in additional vivarium capacity at facility in West Lafayette, IN

Announcement for plans to expand offerings to include cardiovascular safety pharmacology

~~Corporate~~Changed corporate name ~~change~~ to Inotiv, Inc.

~~Events subsequent to March 31, 2021~~

~~Announcement of~~

Entered into a partnership with PhoenixBio Co., Ltd. to expand discovery pharmacology offering

~~On April 19, 2021, the Company announced plan to expand internal operations at its St. Louis location contingent upon receiving financing and obtaining related business incentives.~~

Acquired assets of HistoTox Labs

●	·Acquired Bolder BioPath

●

~~On April 23, 2021, the Company closed~~Completed an underwritten public offering of ~~3,044,117 of its~~3,044 common shares ~~including 397,058 common shares sold pursuant to the full exercise by the underwriter of its option to purchase additional shares to cover over-allotments. All of the shares were sold~~ at a price to the public of $17.00 per ~~share. Net~~share, resulting in net proceeds to the Company ~~from the offering were~~of approximately $49,000, after deducting the underwriting discount and estimated offering expenses. ~~. Part of the net proceeds were used to fund portions of the cash consideration for the HistoTox Labs Acquisition and the Merger.~~

●

~~On April 30, 2021, the Company closed the purchase of substantially all of the assets used or useful~~Obtained $28,000 in HistoTox Labs, Inc.’s business (the “HistoTox Labs Acquistion”) of non-clinical consulting, laboratory and strategic support services and products related to routine and specialized histology, immunohistology, histopathology and image analysis/digital pathology.

On April 30, 2021, the Company closed transactions under the Agreement and Plan of Merger with Bolder BioPATH, Inc. Following the consummation of the merger (the “Merger”) on May 3, 2021, Inotiv Boulder, LLC (“Inotiv Boulder”), as the surviving wholly owned subsidiary of the Company, serves as a contract pharmacology and pathology company specializing in in vivo models of rheumatoid arthritis, osteoarthritis, and inflammatory bowel disease as well as other autoimmune and inflammation models.

~~On April 30, 2021, the Company refinanced its~~additional debt ~~arrangement with~~financing from First Internet Bank of ~~Indiana, to, among other things, raise additional debt capital to fund portions~~Indiana.

●

Announced the purchase of the ~~cash consideration for the HistoTox Labs Acquisition and the Merger. The Company also secured a commitment for~~ ~~approximately $5,000 of additional debt financing to be used in connection with the exercise of the Company’s option to buy its~~ St. Louis facility ~~for approximately $4,700~~ and plans to ~~complete associated expansion, contingent on the Company’s receipt of related business incentives.~~expand capacity there

●	Joined the broad-market Russell 3000® Index and Russell 2000® Index

●	Broadened pathology services to include medical device pathology and hired Nicolette Jackson to lead the medical device pathology effort

Events subsequent to June 30, 2021

·	Acquired certain assets from MilliporeSigma’s BioReliance portfolio to expand genetic toxicology offering

·	Acquired laboratory instrumentation for discovery and development of novel therapies

●	Acquired Gateway Pharmacology Laboratories, LLC to extend an array of in vivo capability and integrated laboratory support services to include cardiovascular and renal pharmacology

Table of Contents

Our financial results for the three months ended ~~March 31,~~June 30, 2021 were positively impacted by increases in sales and gross margins attributable to internal growth the Company has experienced in the Service ~~business.~~business as well as the acquisitions of HistoTox Labs and Bolder BioPATH. During the quarter ended ~~March 31,~~June 30, 2021, we saw an increase in operating expenses as a percentage of revenue compared to the same quarter in the prior year ~~due~~as we continued to ~~higher expenses~~build infrastructure for growth, which included additional headcount, recruiting and relocation ~~higher compensation, including non-cash stock compensation,~~expenses and investments in building out new ~~systems and transaction costs related to the HistoTox Labs and Bolder BioPATH acquisitions.~~service offerings. The financial results were positively impacted by the Products segment of the business as expense reductions were implemented in last half of fiscal year 2020 which improved margins.

Notwithstanding the COVID-19 pandemic, we have maintained our operations. As part of the “essential critical infrastructure” industry, we believe we continue to have a special responsibility to maintain business continuity and a normal work schedule to the greatest extent practicable. We are doing the important work of supporting our clients in their efforts towards drug discovery and development, including working with multiple clients, at our multiple sites, on a variety of therapy or vaccine candidates for COVID-19 and many other lifesaving medicines.

Our team has implemented measures to promote a safe working environment and mitigate risk related to COVID-19, including allowing for work-from-home arrangements where possible, while continuing to support each other and our clients. Among other initiatives related to COVID-19, the Company applied for and accepted funds from the SBA Payroll Protection Program (“PPP”) as part of the CARES Act. The PPP loan was received in April 2020 in the amount of $5,051. The funds were used over the eight weeks following the receipt of the funds for payroll, utility and rent expenses, in step with our business continuity measures and as allowed under the PPP. The Company applied for forgiveness of the PPP loan in the amount of $4,851, which represents qualified expenses. The PPP debt is recorded as a liability on the balance sheet.

On July 16, 2021, the Company received notice from Huntington Bank that the SBA had approved the Company’s application for forgiveness of its PPP Loan in the amount of $4,851.

We believe that the HistoTox Labs Acquisition and the Merger, along with the remaining net proceeds from our recent public offering and the refinancing of our indebtedness with First Internet Bank to be used for internal expansion initiatives, will drive significant long-term value for our customers and shareholders.

Business Overview

The Company provides drug discovery and development services to the pharmaceutical, chemical, and medical device industries, and sells analytical instruments to the pharmaceutical development and contract research industries. Our mission is to provide drug and product developers with superior scientific research and innovative analytical instrumentation in order to bring revolutionary new drugs and products to market quickly and safely. Our strategy is to provide services that will generate high-quality and timely data in support of new drug and product approval or expand their use. Our clients and partners include pharmaceutical, biotechnology, biomedical device, 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 drugs and products and maximize the returns on their research and development investments. We believe that we offer an efficient, variable-cost alternative to our clients’ internal drug and product development programs. Outsourcing development work to reduce overhead and speed product approvals through the Food and Drug Administration (“FDA”) and other regulatory authorities is an established alternative to in-house product development efforts. We derive our revenues from sales of our research services and instruments, both of which are focused on evaluating drug and product safety and efficacy. The Company has been involved in the research of drug and products to treat diseases in numerous therapeutic areas for over 45 years since its formation as a corporation organized in Indiana in 1974.

We support both the non-clinical and clinical development needs of researchers and clinicians for primarily small molecule drug candidates, but also including biotherapeutics and devices. We believe that our scientists have the skills in analytical instrumentation development, chemistry, computer software development, histology, pathology, physiology, medicine, surgery, analytical chemistry, drug metabolism, pharmacokinetics, 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 some 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 therapies.

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 have lost their patent protection over the past few years (e.g. Viagra) or are nearing the end of their patent ~~protections.~~protections (e.g. Januvia & Janumet). This puts significant pressure on these companies to acquire or 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 product 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.

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A significant portion of innovation in the pharmaceutical industry is now driven by smaller, venture capital funded drug discovery 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 their 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, however, are able to pay for CRO Services and products after a reported seven billion dollars in private capital invested in private drug development companies in the first quarter of 2021. These companies have provided significant new opportunities for the CRO industry, including the Company. We believe that the Company is ideally positioned to serve these clients as they look for alternatives to the large CROs that cater primarily to the large pharmaceutical company segment of the marketplace.

We review various metrics to evaluate our financial performance, including revenue, margins and earnings. In the ~~six~~nine months ended ~~March 31,~~June 30, 2021, total revenues increased to ~~$36,636~~$59,529 from ~~$28,930,~~$44,695, a ~~26.6%~~33.2% increase from the ~~six~~nine months ended ~~March 31,~~June 30, 2020. Gross profit increased to ~~$12,201~~$19,848 from ~~$8,670,~~$13,614, a ~~40.7%~~45.8% increase. Operating expenses were higher by ~~28.6%~~44.1% in the ~~six~~nine months ended ~~March 31,~~June 30, 2021 compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2020. The most notable growth in operating expenses is related to our investment and focus to continue to build ~~the~~our infrastructure for growth, which included additional headcount, recruiting and relocation expense, transaction costs related to the HistoTox Labs Acquisition and the Merger, and investments in ~~research and~~business development ~~technology, and systems. During the quarter, we announced services that we are bringing in house such as clinical pathology, cardiovascular safety pharmacology and~~ ~~investments in software solutions and human resources~~ to ~~support existing internal expertise in the area of SEND (Standard for Exchange of Nonclinical Data) data management and delivery. In addition, we announced investments being made in laboratory infrastructure and data and study management technologies through a partnership with Centric Consulting, LLC.~~

build out new service offerings.

As of ~~March 31,~~June 30, 2021, we had ~~$2,186~~$24,660 of cash and cash equivalents as compared to $1,406 of cash and cash equivalents at the end of fiscal 2020. In the first ~~six~~nine months of fiscal 2021, we generated ~~$4,526~~$8,049 in cash from operations as compared to ~~$346~~$1,586 in the same period in fiscal 2020. During the ~~six~~nine months ended ~~March 31,~~June 30, 2021, cash from operations, cash on hand, ~~and $387~~ $1,318 from ~~a cap ex~~an equipment line of credit and borrowings on a term loan of $2,100 together funded capital expenditures of ~~$2,427~~$8,358 for the investment in laboratory equipment to increase capacity at all locations, ~~and~~ facility improvements at the Fort Collins ~~location.~~

location and the acquisition of the St. Louis facility.

As of ~~March 31,~~June 30, 2021, we did not have an outstanding balance on our $5,000 available general line of credit weand had ~~a $2,865~~$900 balance on ~~our~~a $3,000 ~~capex line of credit.~~equipment loan that is available until April 30 2022. As described herein, we incurred indebtedness in connection with financing the Seventh Wave Acquisition, the Smithers Avanza Acquisition, the PCRS Acquisition, the HistoTox Labs Acquisition, the Merger and the expansion of facilities and services. ~~Please refer~~Refer to the Liquidity and Capital Resources section herein ~~as well as Note 13 “Subsequent Events” to the Notes to Condensed Consolidated Financial Statements~~ for a description of our credit arrangements with First Internet Bank.

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,
2021 2020 2021 2020
Service revenue 95.5 % 94.9 % 95.4 % 94.5 %
Product revenue 4.5 5.1 4.6 5.5
Total revenue 100.0 100.0 100.0 100.0

Cost of Service revenue (a) 66.7 67.2 67.3 69.9
Cost of Product revenue (a) 61.5 74.6 54.8 71.5
Total cost of revenue 66.5 67.6 66.7 70.0

Gross profit 33.5 32.4 33.3 30.0

Total operating expenses 36.3 33.7 34.7 34.2

Operating income (loss) (2.8 ) (1.2 ) (1.4 ) (4.2 )

Other expense (1.0 ) (2.4 ) (1.4 ) (2.4 )

Loss before income taxes (3.8 ) (3.6 ) (2.8 ) (6.6 )

Income taxes 0.1 0.1 0.1 0.4

Net loss (3.9 )% (3.7 )% (2.9 )% (7.0 )%

Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020


2021

2020


Services revenue

95.8
%
94.2
%

95.5
%
94.4
%

Products revenue

4.2

5.8

4.5

5.6

Total revenue

100

100

100

100

Cost of services revenue ^(a)

67.1

68.1

67.2

69.0

Cost of products revenue ^(a)

56.3

64.4

55.3

68.9

Total cost of revenue

66.6

67.9

66.7

69.5

Gross profit

33.4

31.4

33.3

30.5

Operating expenses

40.8

34.4

37.1

34.2

Operating income (loss)

(7.4)

(3.0)

(3.8)

(3.8)

Other income (expense)

(2.0)

(2.4)

(1.7)

(2.4)

Income (loss) before income taxes

(9.4)

(5.4)

(5.5)

(6.2)

Income tax expense (benefit)

(20.8)

0.1

(7.9)

0.3

Net income (loss)

11.4
%
(5.6)
%

2.5
%
(6.5)
%

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

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Three Months Ended ~~March 31,~~June 30, 2021 Compared to Three Months Ended ~~March 31,~~June 30, 2020

Service and Product Revenues

Revenues for the quarter ended ~~March 31,~~June 30, 2021 increased ~~17.1%~~45.2% to ~~$18,751~~$22,892 compared to ~~$16,012~~$15,765 for the same period last fiscal year.

Our Service revenue increased ~~17.8%~~47.6% to ~~$17,902~~$21,924 in the three months ended ~~March 31,~~June 30, 2021 compared to ~~$15,191~~$14,852 for the three months ended ~~March 31,~~June 30, 2020. Nonclinical services revenues increased ~~$1,903~~$6,190 due to ~~an overall increase~~internal growth year over year as well as the acquisitions of HistoTox Labs and Bolder BioPATH in the ~~number~~third quarter of ~~studies from the prior~~fiscal year ~~period and increased capacity to perform studies.~~2021. Other laboratory services revenues increased by ~~$974~~$619 in the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, due to internal growth.

	Three Months Ended March 31,
	2021		2020		Change			%

											Three Months Ended
											June 30,
											2021		2020		Change		%
Bioanalytical analysis	$	2,220	$	2,386	$	(166	)		(7.0	)%	$	2,248	$	1,985	$	263	13.2	%
Nonclinical services		14,157		12,254		1,903			15.5	%		18,315		12,125		6,190	51.1	%
Other laboratory services		1,525		551		974			176.8	%		1,361		742		619	83.4	%
	$	17,902	$	15,191	$	2,711
											$	21,924	$	14,852	$	7,072

Sales in our Products segment increased ~~3.4%~~6.1% in the three months ended ~~March 31,~~June 30, 2021 to ~~$849~~$968 from ~~$821~~$913 in the three months ended ~~March 31,~~June 30, 2020. The increase in the ~~second~~third fiscal quarter of 2021 stems from higher sales of analytical instruments, ~~and other instruments,~~ partially offset by a decrease in Culex in-vivo sampling ~~systems.~~systems and other instruments.

	Three Months Ended March 31,
	2021		2020		Change			%

											Three Months Ended
											June 30,
											2021		2020		Change		%
Culex, in-vivo sampling systems	$	210	$	230	$	(20	)		(8.7	)%	$	203	$	404	$	(201)	(49.8)	%
Analytical instruments		561		532		29			5.5	%		653		381		272	71.4	%
Other instruments		78		59		19			32.2	%		112		128		(16)	(12.5)	%
	$	849	$	821	$	28
											$	968	$	913	$	55

Cost of Revenues

Cost of revenues for the three months ended ~~March 31,~~June 30, 2021 was ~~$12,471~~$15,246 or ~~66.5%~~66.6% of revenue, compared to ~~$10,819,~~$10,701, or ~~67.6%~~67.9% of revenue for the three months ended ~~March 31,~~June 30, 2020.

Cost of Service revenue as a percentage of Service revenue decreased to ~~66.7%~~67.1% during the three months ended ~~March 31,~~June 30, 2021 from ~~67.2%~~68.1% in the three months ended ~~March 31,~~June 30, 2020, reflecting greater utilization of recently expanded capacity.

Cost of Products revenue as a percentage of Products revenue in the three months ended ~~March 31,~~June 30, 2021 decreased to ~~61.5%~~56.3% from ~~74.6%~~64.4% in the three months ended ~~March 31,~~June 30, 2020 due to expense reductions implemented in the last half of fiscal 2020, which created improved margins on existing sales.

Operating Expenses

Selling expenses for the three months ended ~~March 31,~~June 30, 2021 ~~decreased 18.8%~~increased 37.3% to ~~$1,175~~$950 from ~~$1,447~~$692 compared to the three months ended ~~March 31,~~June 30, 2020. This ~~decrease~~increase is mainly due to ~~the reduction of non-recurring costs related to the launch of the trade name Inotiv prior to the formal change of our corporate name to Inotiv, Inc., as well as a decrease~~an increase in ~~trade show and~~ travel expenses ~~due to the COVID-19 pandemic,~~ as our sales and marketing teams have ~~been conducting meetings virtually.~~

begun traveling more as the COVID-19 pandemic eases and an increase in commissions due to higher sales awards.

Research and development expenses for the three months ended ~~March 31,~~June 30, 2021 ~~increased 25.3% compared~~of $107 were comparable to the three months ended March 31, 2020 to $203 from $162. The increase was primarily due to internal development investments for new services, such as clinical pathology and cardiovascular safety pharamacology.

~~General and administrative expenses~~$105 for the three months ended March 31, 2021 increased 43.5% to $5,423 from $3,779 compared to the three months ended March 31, 2020, as the Company increased operating expenses related to strategic investment in corporate general and administrative expense to support anticipated future revenue growth, which included recruiting and relocations expense, higher compensation expense, including non-cash stock compensation, new systems and transaction costsJune 30, 2020.

Costs related to the ~~HistoTox Labs Acquisition~~development and ~~the Merger.~~initiation of new service offerings that are not revenue generating at this time are being identified as Startup costs. In addition ~~we announced investments being made in laboratory infrastructure and data and study management technologies through a partnership with Centric Consulting, LLC and~~to investments in software solutions and human resources to support existing internal expertise in the area of SEND (Standard for the Exchange of Nonclinical Data) data management and ~~delivery.~~delivery investments in SEND reporting, safety pharmacology and clinical pathology, during the quarter, we began investing in additional service offerings such as medical device pathology, biotherapeutics, and genetic toxicology. These expenses include, but are not limited to, employee compensation expenses, travel expenses, relocation expenses, and recruiting expenses. While certain of these costs are one-time in nature, there are

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certain costs (e.g. employee compensation expenses) that will be expected to recur once the new offerings are revenue generating at which time the related costs will be reclassified on the consolidated statement of operations. Startup costs for the three months ended June 30, 2021 were $479 as compared to $120 for the three months ended June 30, 2020. Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

General and administrative expenses for the three months ended June 30, 2021 increased 69.0% to $7,813 from $4,624 compared to the three months ended June 30, 2020, as the Company continued to build the infrastructure for growth, which included additional headcount, recruiting and relocation expense and legal and professional costs related to the acquisition of HistoTox Labs and the Merger

Other Income (Expense)

Interest expense for the three months ended ~~March 31,~~June 30, 2021 ~~decreased 6.6%~~increased 17.5% to ~~$366~~$449 from ~~$392~~$382 compared to the three months ended ~~March 31,~~June 30, 2020.

Income Taxes

Our effective tax rates for the three months ended ~~March 31,~~June 30, 2021 and 2020 were ~~(2.09)~~ (220.95)% and ~~(2.15) %,~~(2.40)%, respectively. The income tax benefit recorded for the three-month period ended June 30, 2021 was $4,753 and relates primarily to a discrete change in valuation allowance as a result of the Bolder BioPATH acquisition in the quarter. The income tax expense recorded for ~~each~~the three-month period ended June 30, 2020 was ~~$15 and $11, respectively,~~$21 and relates primarily to certain credits that arise when deferred tax liabilities that are created by indefinite-lived assets cannot be used as a source of taxable income to support the realization of deferred tax assets for valuation allowance purposes. The tax expense associated with such ~~certain~~ credits is required to be recorded.

Net Income/Loss

As a result of the above described factors and the restatement described below, we had a net ~~loss~~income of ~~$723~~$2,602 for the three months ended ~~March 31,~~June 30, 2021 as compared to a net loss of ~~$588~~$879 during the three months ended ~~March 31,~~June 30, 2020. Net income includes the restatement determined by the Company’s management and audit committee of a non-cash tax benefit of $4.9 million relating to a partial release of the Company’s valuation allowance for deferred tax liabilities acquired with the acquisitions of Bolder BioPATH.
~~Six~~Nine Months Ended ~~March 31,~~June 30, 2021 Compared to ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2020
Service and Product Revenues
Revenues for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 increased ~~26.6%~~33.2% to ~~$36,636~~$59,529 as compared to ~~$28,930~~$44,695 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020.
Our Service revenue increased ~~27.8%~~34.8% to ~~$34,934~~$56,858 in the ~~six~~nine months ended ~~March 31,~~June 30, 2021 compared to ~~$27,333~~$42,185 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020. The majority of the increase in service revenue was due to internal growth, augmented by $4,251 of incremental revenue from operations at the Boulder, CO location, which we acquired in connection with the acquisition of ~~$1,500~~HistoTox Labs and the Merger in the ~~first~~third fiscal quarter of ~~fiscal 2021 attributable to a full six months~~2021.

Nine Months Ended

June 30,


2021

2020

Change

%

Bioanalytical analysis

$
6,118

$
5,899

$
219

3.7
%
Nonclinical services

46,160

34,301

11,859

34.6
%
Other laboratory services

4,580

1,985

2,595

130.7
%

$
56,858

$
42,185

$
14,673

Table of ~~Fort Collins, CO, related operations, combined with additional revenue as a result of organic growth~~.Contents

Six Months Ended
March 31,
2021 2020 Change %
Bioanalytical analysis $ 3,870 $ 3,712 $ 158 4.3 %
Nonclinical services 27,845 22,382 5,463 24.4 %
Other laboratory services 3,219 1,239 1,980 159.8 %
$ 34,934 $ 27,333 $ 7,601

Sales in our Product segment increased ~~6.6%~~6.4% in the first ~~six~~nine months ended ~~March 31,~~June 30, 2021 to ~~$1,702~~$2,671 from ~~$1,597~~$2,510 when compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2020 reflecting higher sales of ~~Culex in-vivo sampling systems and~~ analytical instruments, partially offset by a decrease in Culex in-vivo sampling systems and other instruments.

Nine Months Ended

June 30,


2021

2020

Change

%

Culex, in-vivo sampling systems

$
675

$
808

$
(133)

(16)
%
Analytical instruments

1,718

1,304

414

31.7
%
Other instruments

278

398

(120)

(30.2)
%

$
2,671

$
2,510

$
161

Six Months Ended
March 31,
2021 2020 Change %
Culex, in-vivo sampling systems $ 471 $ 406 $ 65 16.0 %
Analytical instruments 1,065 921 144 15.6 %
Other instruments 166 270 (104 ) (38.5 )%
$ 1,702 $ 1,597 $ 105
21

Cost of Revenues
Cost of revenues for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 was ~~$24,435~~$39,681 or 66.7% of revenue, compared to ~~$20,260,~~$30,849, or ~~70.0%~~69.0% of revenue compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2020.
Cost of Service revenue as a percentage of Service revenue decreased to ~~67.3%~~67.2% during the ~~six~~nine months ended ~~March 31,~~June 30, 2021 from ~~69.9%~~69.0% in the ~~six~~nine months ended ~~March 31,~~June 30, 2020 reflecting operating leverage and the greater utilization of recently expanded capacity.
Cost of Product revenue as a percentage of Product revenue in the ~~six~~nine months ended ~~March 31,~~June 30, 2021 decreased to ~~54.8%~~55.3% from ~~71.5%~~68.9% in the ~~six~~nine months ended ~~March 31,~~June 30, 2020 due to expense reductions implemented in the last half of fiscal 2020, which created improved margins on existing sales.
Operating Expenses
Selling expenses for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 decreased ~~19.8%~~12.3% to ~~$2,138~~$2,343 from ~~$2,665~~$2,672 compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2020. This decrease is mainly due to the reduction of non-recurring costs of nearly $190 that was related to the launch of the trade name Inotiv prior to the formal change of our corporate name to Inotiv, Inc., as well as a decrease in trade show and travel expenses due to the COVID-19 pandemic, as our sales and marketing teams have been conducting meetings ~~virtually.~~
virtually, although travel has begun to increase during the third quarter of fiscal year 2021.
Research and development expenses for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 ~~increased 23.1%~~decreased 32.4% compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2020 to ~~$399~~$290 from ~~$324. The increase was primarily due to internal development investments for new services, such as clinical pathology and cardiovascular safety pharamacology.~~$429.
General and administrative expenses for the six months ended March 31, 2021 increased 47.5% to $10,171 from $6,896 compared to the six months ended March 31, 2020 as the Company increased operating expenses related to higher strategic investment in corporate general and administrative expense to support anticipated future revenue growth, which included recruiting and relocations expense, higher compensation expense, including non-cash stock compensation, new systems and transaction costsCosts related to the ~~HistoTox Labs~~development and ~~Bolder BioPATH acquisitions. In addition,~~initiation of new service offerings and are not revenue generating at this time are being identified as Startup costs. During the nine months ended June 30, 2021, we ~~announced investments being made~~invested in ~~laboratory infrastructure and data and study management technologies through a partnership with Centric Consulting, LLC and investments in~~additional service offerings such as software solutions and human resources to support existing internal expertise in the area of SEND (Standard for the Exchange of Nonclinical Data) data management and ~~delivery.~~delivery investments in SEND reporting, safety pharmacology, clinical pathology, medical device pathology, biotherapeutics and genetic toxicology. These expenses include, but are not limited to, employee compensation expenses, travel expenses, relocation expenses and recruiting expenses. While certain of these costs are one-time in nature, there are certain costs (e.g. salaries) that will be expected to recur once the new offerings are revenue generating at which time the related costs will be reclassified on the consolidated statement of operations, respectively. Startup costs for the nine months ended June 30, 2021 were $841 as compared to $232 for the nine months ended June 30, 2020. Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
General and administrative expenses for the nine months ended June 30, 2021 increased 52.3% to $18,584 from $12,205 compared to the nine months ended June 30, 2020 as the Company continued to build the infrastructure for growth, which included additional headcount, recruiting and relocation expense as well as transaction costs related to the acquisition of HistoTox Labs and the Merger. In addition, we announced investments being made in laboratory infrastructure and data and study management technologies through a partnership with Centric Consulting, LLC.
Other Income (Expense)
Interest expense for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 increased ~~1.4%~~7.2% to ~~$713~~$1,163 from ~~$703~~$1,085 compared to the ~~six~~nine months ended ~~March 31, 2020.~~June 30, 2020 due to higher debt levels.

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Income Taxes

Our effective income tax rates for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020 were ~~(4.58)~~(147.39)% and ~~(5.94)~~(4.62)%, respectively. The income tax benefit recorded for the nine months ended June 30, 2021 was $4,706 and relates primarily to a discrete change in valuation allowance as a result of the Bolder BioPATH acquisition in the quarter. The income tax expense recorded for ~~each period~~nine months ended June 30, 2020 was ~~$48 and $108, respectively,~~$129 and relates primarily to certain credits that arise when deferred tax liabilities that are created by indefinite-lived assets cannot be used as a source of taxable income to support the realization of deferred tax assets for valuation allowance purposes. The tax expense associated with such ~~certain~~ credits is required to be recorded.

Net Income (Loss)

As a result of the factors described above and the restatement below, net ~~loss~~income for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 amounted to ~~$1,089,~~$1,513, compared to net loss of ~~$2,014~~$2,893 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020. Net income includes the restatement determined by the Company’s management and audit committee of a non-cash tax benefit of $4.9 million relating to a partial release of the Company’s valuation allowance for deferred tax liabilities acquired with the acquisitions of Bolder BioPATH in the third quarter.

Liquidity and Capital Resources

Comparative Cash Flow Analysis

At ~~March 31,~~June 30, 2021, we had cash and cash equivalents of ~~$2,186,~~$24,660, compared to $1,406 at September 30, 2020.

Net cash provided by operating activities was ~~$4,526~~$8,049 for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 compared to net cash provided by operating activities of ~~$346~~$1,586 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020. Contributing factors to our cash provided by operations in the first ~~six~~nine months of fiscal 2021 were noncash charges of ~~$2,154~~$4,087 for depreciation and amortization, ~~$460~~$1,040 for stock compensation expense, a change in deferred taxes of $4,867, and a net increase in customer advances of ~~$3,831,~~$7,451, as a result of increasing ~~orders.~~orders and the acquisitions of HistoTox Labs and Bolder BioPATH. These items were partially offset by an increase of ~~$1,927~~$1,306 in accounts ~~receivable.~~

payable and an increase of $1,594 in accrued expenses.

Days’ sales in accounts receivable ~~decreased~~increased to 4874 days at ~~March 31,~~June 30, 2021 from 56 days at September 30, 2020 due to an increase in ~~revenue.~~accounts receivable from the acquisitions during the quarter. 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 ~~six~~nine months ended ~~March 31,~~June 30, 2020 ~~were noncash~~are non-cash charges of ~~$1,673~~$2,747 for depreciation and amortization, ~~$204~~$380 for stock compensation expense, ~~$75 of amortization of finance lease~~$327 increase in accrued expenses and a net increase in customer advances of ~~$3,791,~~$4,063, as a result of increasing orders. These items were partially offset by an increase of ~~$1,873~~$701 in accounts receivable, an increase of ~~$723~~$395 in ~~prepaid expenses and other assets, a decrease of $422 in accrued expenses~~inventories, and a decrease of ~~$577~~$2,040 in accounts payable.

Investing activities used ~~$2,425~~$49,054 in the ~~six~~nine months ended ~~March 31,~~June 30, 2021 due mainly to cash paid in the acquisition of HistoTox and the Merger of $40,698 and capital expenditures of ~~$2,427~~$8,358 as compared to ~~$3,351~~$9,094 used in the first ~~six~~nine months of fiscal 2020. The capital additions during the ~~six~~nine months ended ~~March 31,~~June 30, 2021 consisted of the purchase of our St. Louis facility, facility improvements in Ft. Collins and investments in laboratory ~~equipment to increase capacity and improvements in our Fort Collins facility.~~

equipment.

Financing activities ~~used $1,321~~provided $64,259 in the ~~six~~nine months ended ~~March 31,~~June 30, 2021, compared to ~~$6,597~~$9,850 provided during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. The ~~use of~~ cash provided in the first ~~six~~nine months of fiscal 2021 included ~~payments~~proceeds from the issuance of common stock of $48,972 and borrowings on long-term ~~debt~~loans of ~~$1,436, financing lease~~$17,087, partially offset by payments of ~~$206~~long-term borrowings of $2,620 and debt issuance costs of ~~$41, which were partially offset by proceeds from the exercise of stock options of $111.~~$409. The main sources of cash in the first ~~six~~nine months of fiscal 2020 were from borrowings on the long-term loan of ~~$3,533,~~$3,726, funds received from the PPP loan of $5,051 and borrowings on the Construction ~~loans~~loan and Capex lines of credit of ~~$1,089~~$1,287 and ~~$1,329, respectively, and additional borrowings against the Revolving Facility of $1,552. These items were partially offset by~~$2,423, respectively. Total long-term loan payments were $1,157 and net repayments on the Revolving Credit facility were $1,063. Finance lease payments of ~~$603, finance lease payment of $212~~$330 and payment of debt issuance cost of ~~$111.~~$111 also contributed to the use of cash.

Capital Resources

Credit Facility

On April 30, 2021, the Company refinanced its credit arrangements with First Internet Bank (“FIB”) in order to, among other things, secure additional debt financing. The discussion below describes our credit arrangements with FIB as of March 31, 2021. For a description of our credit arrangements with FIB as of the April 30, 2021 refinancing, refer to Note 13 “Subsequent Events” to the Notes to Condensed Consolidated Financial Statements.

~~On December 1, 2019,~~ we entered into an Amended and Restated Credit Agreement ~~(as had previously been amended from time to time, the~~(the “Credit Agreement”) with ~~FIB. As~~First Internet Bank of ~~March 31, 2021,~~Indiana (“FIB”) to, among other things, secure additional debt financing in order to fund portions of the consideration for the acquisition of HistoTox Labs and the Merger. The Credit Agreement included ~~five~~eleven term loans (the ~~“Initial Term Loan,” “Second Term Loan,” “Third Term Loan,” “Fourth Term Loan,”~~“Term Loans”), an equipment

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draw loan (the “Equipment Loan”), and ~~“Fifth Term Loan,” respectively),~~ a revolving line of credit (the “Revolving Facility”), a construction draw loan (the “Construction Draw Loan”), an equipment draw loan (the “Equipment Draw Loan”), and two capital expenditure instruments (the “Initial Capex Line” and the “Second Capex Line,” respectively).

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 June 23, 2022. The balance on the Initial Term Loan at March 31, On May 26, 2021, ~~was $3,622. We used the proceeds from the Initial Term Loan to satisfy our indebtedness with Huntington Bank and terminated the related interest rate swap.~~

The Second Term Loan for $5,500 was used to fund a portion of the cash consideration for the Seventh Wave Acquisition. Amounts outstanding under the Second Term Loan bear interest at a fixed per annum rate of 5.06%, with monthly principal and interest payments equal to $78. The Second Term Loan matures July 2, 2023 and the balance on the Second Term Loan at March 31, 2021 was $3,634.

The Third Term Loan for $1,271 was used to fund the cash consideration for the Smithers Avanza Acquisition. Amounts outstanding under the Third Term Loan bear interest at a fixed per annum rate of 4.63%. The Third Term Loan required monthly interest only payments until December 1, 2019, from which time payments of principal and interest in monthly installments of $20 are required, with all accrued but unpaid interest, cost and expenses due and payable at the maturity date. The Third Term Loan matures November 1, 2025 and the balance on the Third Term Loan at March 31, 2021 was $1,018.

The Fourth Term Loan in the principal amount of $1,500 has a maturity of June 1, 2025. Interest accrues on the Fourth Term Loan at a fixed per annum rate equal to 4%, with interest payments only having commenced January 1, 2020 through June 1, 2020, with monthly payments of principal and interest thereafter through maturity. The balance on the Fourth Term Loan at March 31, 2021 was $1,286.

The Fifth Term loan in the principal amount of $1,939 has a maturity of December 1, 2024. Interest accrues on the Fifth Term Loan at a fixed per annum rate equal to 4%, with payments of principal and interest due monthly through maturity. The balance on the Fifth Term Loan at March 31, 2021 was $1,858. Wewe entered into ~~the Fourth Term Loan and the Fifth Term Loan in connection with the PCRS Acquisition.~~

~~The Revolving Facility provides a line of credit for up~~an amendment to ~~$5,000, which the Company may borrow from time to time, subject to the terms of~~ the Credit Agreement ~~including as may be limited by~~to, among other things, provide a new term loan facility to finance the ~~amount~~acquisition and refurbishment of our Maryland Heights, Missouri, facility, which we had previously leased. The material terms of each of the Company’s outstanding eligible receivables. The Revolving Facility requires monthly accrued and unpaid interest payments only until maturity at a floating per annum rate equal to the greater of (a) 4%, or (b) the sum of the Prime Rate plus Zero Basis Points (0.0%), which rate shall change concurrently with the Prime Rate. The Company did not have an outstanding balance on the Revolving Facility as of December 31, 2020. On April 31, 2021, the parties amended the Revolving Facility to extend its maturity through April 30, 2023. Refer to Note 13 “Subsequent Events” to the Notes to Condensed Consolidated Financial Statements.

The Construction Draw Loan and the Equipment Draw Loan were utilized in connection with the Evansville facility expansion and provided for borrowings up to principal amounts not to exceed $4,445 and $1,429, respectively. Amounts outstanding under these loans bear interest at a fixed per annum rate of 5.20%. The Construction Draw Loan and Equipment Draw Loan each mature on March 28, 2025. As of March 31, 2021, there was a $4,015 balance on the Construction Draw Loan and a $1,103 balance on the Equipment Draw Loan.

The Initial Capex Line previously provided for borrowings up to the principal amount of $1,100, which the Company could borrow from time to time, subject to the terms of the Credit Agreement. On March 27, 2020, the parties amended the Initial Capex Line to eliminate the revolving nature of the line in favor of a term loan in the principal amount of $948, equivalent to the amount of borrowings then outstanding on the Initial Capex Line. As amended, the Initial Capex Line matures on June 30, 2025, and as of March 31, 2021, had a balance of $826. Interest accrues on the principal balance of the Initial Capex Line at a fixed per annum rate equal to 4%. The Initial Capex Line requires payments of principal and interest in monthly installments equal to $17.

The Second Capex Line previously provided for borrowings up to the principal amount of $3,000, which the Company could borrow from time to time, subject to the terms of the Credit Agreement. On December 18, 2020, the parties amended the Second Capex Line to eliminate the revolving nature of the line in favor of a term loan in the principal amount of $3,000, equivalent to the amount of borrowings then outstanding on the Second Capex Line. As amended, the Second Capex Line matures on December 31, 2025. Interest accrues on the principal balance of the Second Capex Line at a fixed per annum rate equal to 4.25%. Commencing January 31, 2021, and on the last day of each monthly period thereafter until and including on the maturity date, the Second Capex Line requires payments of principal and interest in monthly installments equal to $55, and as of March 31, 2021, had a balance of $2,865.

~~The Company’s obligations~~ under the Credit Agreement, as amended, are guaranteed by BAS Evansville, Inc. (“BASEV”), Seventh Wave Laboratories, LLC, BASi Gaithersburg LLC, as well as Bronco Research Services LLC (“Bronco”), each a wholly owned subsidiary of the Company (collectively, the “Guarantors”). The Company’s obligations underdescribed below.

Included in the Credit Agreement and the Guarantor’s obligations under their respective guaranties are secured by first priority security interests in substantially all of the assets of the Company and the Guarantors, respectively, mortgages on the Company’s BASEV’s and Bronco’s facilities in West Lafayette, Indiana, Evansville, Indiana, and Fort Collins, Colorado, respectively, and pledges of the Company’s ownership interests in its subsidiaries.

~~As amended, (i) beginning March 31, 2021, the Company~~ is ~~required~~a requirement that we maintain certain financial covenants, including maintaining a senior funded debt to ~~maintain a Fixed Charge Coverage Ratio~~adjusted EBITDA ratio (as defined in the Credit Agreement)~~, tested quarterly,~~ of not ~~less~~greater than ~~(a)~~(i) 5.25 to 1.00 as of ~~March 31, 2021 1.05 to 1.0, (b)~~the date of the Credit Agreement and as of June 30, 2021, ~~1.10~~(ii) 4.75 to 1.00 as of September 30, 2021, (iii) 4.50 to 1.00 as of December 31, 2021, (iv) 4.25 to 1.00 as of March 31, 2022, (v) 4.00 to 1.00 as of June 30, 2022, and ~~(c)~~(vi) 3.50 to 1.00 as of September 30, 2022 and as of each fiscal quarter end thereafter.

Also included in the Credit Agreement is a requirement that we maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of not less than (i) 1.20 to 1.00, commencing as of September 30, 2021, and ~~for~~continuing as of each fiscal quarter end thereafter ~~1.20~~up to ~~1.00~~and including June 30, 2022, and (ii) ~~the Company is required~~1.25 to ~~maintain a Cash Flow Leverage Ratio (as defined in the Credit Agreement), tested quarterly, not to exceed (a) as of March 31, 2021, 5.75 to~~ 1.00 ~~(b) as of June 30, 2021, 5.00 to 1.00 and (c)~~ as of September 30, ~~2021~~2022 and ~~for~~as of each fiscal quarter thereafter, 4.25 to 1.00. The Fixed Charge Coverage Ratio and Cash Flow Leverage Ratio are measured on a trailing twelve (12) month basis, provided, however, that in the case of Fixed Charge Coverage Ratio calculations for the remainder of fiscal 2021 (i) the measurement period for the quarter ending March 31, 2021 includes only the quarter ending March 31, 2021, (ii) the measurement period for the quarter ending June 30, 2021 includes only the quarters ending March 31, 2021 and June 30, 2021 and (iii) the measurement period for the quarter ending September 30, 2021 includes only the quarters ending March 31, 2021, June 30, 2021 and September 30, 2021.

end thereafter.

Our obligations under the Credit Agreement are guaranteed by each of our subsidiaries (collectively, the “Guarantors”). Our obligations under the Credit Agreement and the Guarantors’ obligations under their respective guaranties are secured by first priority security interests in substantially all of our assets and the assets of the Guarantors, mortgages on our real property in West Lafayette, Indiana, Evansville, Indiana, Maryland Heights, Missouri, and Fort Collins, Colorado, and pledges of our ownership interests in our subsidiaries. We have also obtained a life insurance policy in anthe amount of ~~$5,000~~$5.0 million for ~~its~~our President and Chief Executive Officer and provided FIB an assignment of such life insurance policy as additional collateral.

(a) Terms of the Equipment Loan.

We may borrow under the Equipment Loan on or before April 30, 2022 in the aggregate principal amount of up to $3.0 million (the “Equipment Loan Commitment”). The Equipment Loan Commitment will automatically terminate upon the earlier of (x) any funding of the maximum amount of the Equipment Loan Commitment and (y) 5:00 p.m., Indianapolis time, on April 30, 2022. Until April 30, 2022, we must pay interest on the amount outstanding under the Equipment Loan at a fixed annual rate of 4.00%. On April 30, 2022, all amounts outstanding under the Equipment Loan will be converted to a term loan and repaid monthly in installments of principal based on a five (5) year amortization schedule together with the interest that shall accrue thereon. A final installment representing the entire unpaid principal of the Equipment Loan, and all accrued and unpaid interest thereon and all fees and charges in connection therewith, will be due and payable on April 30, 2027. Advances under the Equipment Loan will be used to fund our equipment needs as approved by FIB.

(b) Terms of the Revolving Facility.

The Revolving Facility provides a line of credit for up to $5.0 million, which we may borrow from time to time, subject to the terms of the Credit Agreement, including as may be limited by the amount of our outstanding eligible receivables. The Revolving Facility requires monthly accrued and unpaid interest payments only until maturity at a floating per annum rate equal to the greater of (a) 4.00%, or (b) the Prime Index (as defined in the Credit Agreement). We did not have an outstanding balance on the Revolving Facility as of June 30, 2021. Advances under the Revolving Facility will be used for general working capital purposes.

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(c) Terms of the Term Loans:

Principal Amount









as of date of Credit

Monthly

Agreement

Balance

Annual

Payment

April 30, 2021

June 30, 2021

Interest

Amount

Loan Name

(000)

(000)

Rate

(000)

Maturity Date

Use of Proceeds
Term Loan 1

$
3,980

$
3,943

5.20
%
$
36

March 28, 2025

Funded expansion of building on real property in Mount Vernon, IN
Term Loan 2

$
3,571

$
3,446

5.06
%
$
78

July 2, 2023

Funded a portion of the cash consideration for the Seventh Wave Laboratories acquisition
Term Loan 3

$
1,076

$
1,031

5.20
%
$
32

March 28, 2025

Funded equipment needs associated with expansion of real property in Mount Vernon, IN
Term Loan 4

$
1,001

$
969

4.63
%
$
20

November 1, 2025

Funded the cash consideration for the Smithers Avanza acquisition
Term Loan 5

$
810

$
781

4.00
%
$
17

June 30, 2025

Funded certain capital expenditures
Term Loan 6

$
2,865

$
2,728

4.25
%
$
56

December 31, 2025

Funded certain capital expenditures
Term Loan 7

$
1,263

$
1,216

4.00
%
$
28

June 1, 2025

Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 8

$
1,853

$
1,842

4.00
%
$
12

December 1, 2024

Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 9

$
10,000

$
9,850

3.85
%
$
184 (a)

April 30, 2026

Funded a portion of the cash consideration of the Merger
Term Loan 10

$
5,000

$
4,925

3.85
%
$
92 (a)

April 30, 2026

Funded a portion of the cash consideration of the HistoTox Labs Acquisition
Term Loan 11

$
3,622

$
3,559

3.99
%
$
33

June 23, 2022

Refinanced debt with The Huntington Bank for general business purposes
Term Loan 12

$
4,832 (b)

$
2,088

3.85
%
$
10 (c)

December 26, 2026

Financed the acquisition of the St. Louis facility and associated expansion

^(a)See Mandatory Prepayments information below.
^(b)Principal amount as of May 26, 2021.
^(c) The monthly payment amount increases to $29 on January 1, 2022.

(d) Mandatory Prepayments.
Commencing with the fiscal year ending September 30, 2021 and for each fiscal year thereafter until the Term Loan 9 and/or Term Loan 10, in each case, are paid in full, we must prepay Term Loan 9 and Term Loan 10 on a pro rata basis on the following January 31st, in an amount equal to 50% of our excess cash flow (as defined in the Credit Agreement) for such fiscal year (in each case, an “Excess Cash Flow Payment”), provided that for the fiscal year ending September 30, 2021 the Excess Cash Flow Payment, if any, will be calculated only for the period from April 30, 2021 through September 30, 2021. Excess cash flow will be calculated for each fiscal year based on (a) our adjusted EBITDA (as defined in the Credit Agreement), minus (b) cash interest expense, minus (c) cash taxes paid or cash distributions made for payment of taxes, minus (d) principal payments paid in respect of long-term indebtedness (excluding any principal reduction on Term Loan 9 or Term Loan 10, in each case, with respect to excess cash flow and excluding principal payments on the Revolving Facility), minus (e) capital expenditures not funded by advances under the Equipment Loan as specified under the Credit Agreement.
Acquisition-related Debt
In addition to the indebtedness under ~~our~~the Credit Agreement, certain of our subsidiaries have issued unsecured notes as partial payment of the purchase prices of certain acquisitions as described herein. Each of these notes is subordinated to the indebtedness under the Credit Agreement.
As part of the Smithers Avanza ~~Acquisition, we have~~acquisition, our BASi Gaithersburg subsidiary issued an unsecured subordinated promissory note payable to the Smithers Avanza ~~Seller~~seller in the initial principal amount of $810, ~~made by BASi Gaithersburg and guaranteed by the Company.~~which we guaranteed. The promissory note bears interest at a rate of 6.5% per annum, with monthly payments of principal and interest and a maturity date of May 1, 2022. At ~~March 31,~~June 30, 2021, the balance on the note payable to the Smithers Avanza ~~Seller~~seller was ~~$480.~~ $385.
As part of the PCRS Acquisition, ~~we also have~~our Bronco Research Services subsidiary issued an unsecured subordinated promissory note payable to the PCRS ~~Seller~~seller in the initial principal amount of $800. The promissory note bears interest at a rate of 4.5% per annum with

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monthly payments of principal and interest and a maturity date of December 1, 2024. At ~~March 31,~~June 30, 2021, the balance on the note payable to the PCRS ~~Seller~~seller was ~~$719. In connection with~~$702.

As part of the ~~Merger,~~acquisition of Boulder BioPATH, our Inotiv Boulder subsidiary issued unsecured subordinated promissory notes payable to the ~~Company has also issued seller notes~~former shareholders of Boulder BioPATH in an aggregate principal amount of $1,500. ~~Refer to Note 13 “Subsequent Events”~~The promissory notes bear interest at a rate of 4.5% per annum, with monthly payments of principal and interest and a maturity date of May 1, 2026. At June 30, 2021, the balance on the notes payable to the ~~Notes to Condensed Consolidated Financial Statements.~~former Boulder BioPATH shareholders was $1,500.

PPP Loan

On April 23, 2020, we were granted a loan (the “Loan”) from Huntington National Bank in the aggregate amount of $5,051, pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The terms of the Loan call for repayment of the principal and accrued interest under the Loan in eighteen installments of $283 beginning on November 16, 2020 and continuing monthly until the final payment is due on April 16, 2022. However, the bank is not requiring payments of principal or interest pending the loan forgiveness decision. We ~~have~~ applied for forgiveness of the loan in the amount of $4,851.

On July 16, 2021, we received notice from Huntington Bank that the SBA had approved our application for forgiveness of the PPP Loan in the full amount requested.

On January 28, 2015, ~~the Company~~we entered into a lease agreement with Cook Biotech, Inc. The lease agreement has and will provide ~~the Company~~us 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.

On April 23, 2021, we closed an underwritten public offering of 3,044 of our common shares. All of the shares were sold at a price to the public of $17.00 per share. Net proceeds from the offering were approximately $49.0 million, after deducting the underwriting discount and estimated offering expenses, a portion of which net proceeds were used to fund a portion of the cash consideration paid in the acquisitions of HistoTox Labs and the Merger. The remainder of the net proceeds from the offering remain available for general corporate purposes, including capital expenditures and potential future acquisitions.

~~The Company’s sources~~Sources of liquidity for fiscal 2021 are expected to consist primarily of cash generated from operations, cash on-hand (including the remaining net proceeds from the April public offering) and additional borrowings available under our Credit Agreement, as refinanced on April 30, 2021, an additional commitment from FIB for approximately $5,000 of financing to be used in connection with the exercise of the Company’s option to buy its St. Louis facility for approximately $4,700 and to complete associated expansion, contingent on the Company’s receipt of related business incentives, and remaining net proceeds from our recent public offering.Agreement. 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. Positive cash flow and access to capital will be important to our ability to make such investments. 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

Information pertaining to controls and procedures in this Item 4 has been updated for events and developments occurring subsequent to the filing of the original Form 10-Q related to the third quarter of fiscal 2021.

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.

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

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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 initially 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,~~June 30, 2021.

In light of the restatement of our financial statements for the period covered by this report due to a failure to properly account for certain tax attributes related to the Bolder BioPATH acquisition that occurred in the Company's third fiscal quarter, management has reevaluated the effectiveness of certain of the Company’s disclosure controls and procedures and internal controls over financial reporting as of June 30, 2021. Based on this reevaluation, our Chief Executive Officer and Chief Financial Officer have concluded that during the period covered by this report, certain of our disclosure controls and procedures were not effective due to a material weakness in internal controls over financial reporting, specifically as it relates to the tax impact of acquisitions that qualify as stock transactions for tax purposes.

To address this material weakness, management has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of its internal control over financial reporting and to provide processes and controls over the research and understanding of the tax impact of acquisitions that qualify as stock transactions for tax purposes. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to better evaluate our research and understanding of the nuances of the tax impact of acquisitions that qualify as stock transactions for tax purposes. We plan to include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding the tax impact of acquisitions that qualify as stock transactions for tax purposes. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

Other than this issue, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Controls

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the ~~second~~third quarter of fiscal 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial ~~reporting.~~reporting as the circumstances that led to the material weakness described above had not yet been identified. We are in the process of implementing changes to our internal control over financial reporting to remediate the material weakness, as more fully described above. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

PART II
ITEM 1 – LEGAL PROCEEDINGS
There were no material changes during the ~~second~~third quarter of fiscal 2021 to our disclosure in Item 3 of our Form 10-K for fiscal 2020.
ITEM 1A - RISK FACTORS
Information pertaining to our risk factors has been updated in connection with the restated financials noted herein.
Before investing in our securities you should carefully consider the risks described below and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, 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 our subsequent Quarterly Reports. Realization of any of these risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.
25
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

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results, or the extent to which any such risk factor or combination of risk factors may impact our business, financial condition and operating results.

The HistoTox Labs Acquisition and the Merger may present many risks, and we may not realize the strategic and financial goals that were contemplated at the time we entered into the Purchase Agreement and the Merger Agreement.

Risks we may face in connection with the HistoTox Labs Acquisition and the Merger (together, the “Acquisitions”) include:

We may not realize the benefits we expect to receive from the Acquisitions, such as anticipated synergies.

We may have difficulties managing Inotiv – Boulder ~~HTL’s~~HTL’s and/or Inotiv ~~Boulder’s~~Boulder’s services or retaining key personnel from HistoTox Labs and/or Bolder BioPATH.

The Acquisitions may not further our business strategy as we expect, we may not successfully integrate HistoTox Labs and/or Bolder BioPATH as planned, there could be unanticipated adverse impacts on HistoTox ~~Labs’~~Labs’ and/or Bolder ~~BioPATH’s~~BioPATH’s businesses, or we may otherwise not realize the expected return on our investments, which could adversely affect our business or operating results and potentially cause impairment to assets that we record as a part of the Acquisitions, including intangible assets and goodwill.

Our operating results or financial condition may be adversely impacted by (i) claims or liabilities related to HistoTox ~~Labs’~~Labs’ and/or Bolder ~~BioPATH’s~~BioPATH’s businesses including, among others, claims from U.S. regulatory or other governmental agencies, terminated employees, current or former customers or business partners, or other third parties; (ii) pre-existing contractual relationships of HistoTox Labs and/or Bolder BioPATH that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business; (iii) unfavorable accounting treatment as a result of HistoTox ~~Labs’~~Labs’ and/or Bolder ~~BioPATH’s~~BioPATH’s practices; and (iv) intellectual property claims or disputes.

Neither HistoTox Labs nor Bolder BioPATH was required to maintain an internal control infrastructure that would meet the standards of a public company, including the requirements of the Sarbanes-Oxley Act of 2002. The costs that we may incur to implement such controls and procedures may be substantial and we could encounter unexpected delays and challenges in this implementation. In addition, we may discover significant deficiencies or material weaknesses in the quality of Inotiv – Boulder ~~HTL’s~~HTL’s and or Inotiv ~~Boulder’s~~Boulder’s financial and disclosure controls and procedures.

Future sales of our common shares by us or our existing shareholders could cause our share price to decline.

Sales of a substantial number of our common shares in the public market, or the perception that these sales might occur, could depress the market price of our common shares and could impair our ability to raise capital through the sale of additional equity securities. Further, we have stock options outstanding. As of ~~March 31,~~June 30, 2021, we had ~~11,181,506~~15,866,655 outstanding common shares and ~~671,000~~868,550 common shares issuable upon the exercise of outstanding stock options, of which approximately 3,200,954 shares and 240,500 shares underlying stock options are subject to restrictions on transfer under 90-day lock-up arrangements with the underwriter of our public offering. These shares will become eligible for public sale at the expiration of the lock-up period, subject to vesting requirements and volume limitations applicable to affiliates. If a substantial number of common shares, including common shares underlying outstanding stock options, are sold, or if it is perceived that they will be sold, in the public market, it could have an adverse impact on the market price of our common shares.

In addition, as part of the Merger, we issued 1,588,235 common shares as consideration payable to the Bolder BioPATH equity holders. Following a one-year lock-up period from the closing of the Merger, such shares will be freely tradeable.

Furthermore, our directors and executive officers may in the future adopt written trading plans that are intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under which they may in the future contract with a broker to sell our common shares. Sales of substantial amounts of our common shares in the public markets pursuant to new Rule 10b5-1 plans, or the perception that these sales could occur, could cause the market price of our common shares to decline. We are unable to predict the effect that sales may have on the prevailing market price of our common shares.

We have incurred significant additional indebtedness during recent periods, which may impair our ability to raise further capital or impact our ability to service our debt.

We have incurred significant additional indebtedness during recent periods, including in order to finance the HistoTox Labs Acquisition and the Merger and to support other corporate endeavors. Our additional indebtedness may impair our ability to raise further capital, including to expand our business, pursue strategic investments, and take advantage of financing or other opportunities that we

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believe to be in the best interests of the Company and our shareholders. Our additional indebtedness may also impact our ability to service our debt and to comply with financial covenants and the other terms of our relevant credit arrangements, in which case our lenders might pursue available remedies up to and including terminating our credit arrangements and foreclosing on available collateral.

We may need additional capital, and any additional capital we seek may not be available in the amount or at the time we need it.

We ~~anticipate utilizing~~utilized additional debt financing in order to fund the exercise of the Company’s option to buy its St. Louis facility for approximately $4,700 and to complete associated ~~expansion, contingent on the Company’s receipt of related business incentives.~~expansion.

In general, additional capital may be raised through the sale of common shares, preferred equity or convertible debt securities, entry into debt facilities or other third-party funding arrangements. The sale of equity and convertible debt securities may result in dilution to our shareholders and those securities may have rights senior to those of our common shares. Agreements entered into in connection with such capital raising activities could contain covenants that would restrict our operations or require us to relinquish certain rights. Additional capital may not be available on reasonable terms, or at all. If we cannot timely raise any needed funds, we may be forced to reduce our operating expenses, which could adversely affect our ability to implement our long-term strategic roadmap and grow our business.

Our expected financing needs are based upon management’s estimates as to future revenue and expense. Our business plan and financing needs are subject to change based upon, among other factors, our ability to increase revenues and manage expenses. If our estimates of our financing needs change, we may need additional capital more quickly than we expect or we may need a greater amount of capital.

In connection with the recent restatement of our financial statements, our management has concluded that certain of our disclosure controls and procedures were not effective as of June 30, 2021 due to a material weakness in internal control over financial reporting solely related to our accounting for the tax impact of acquisitions that qualify as stock transactions for tax purposes. If we are unable to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and financial results.

~~If securities or industry analysts issue~~Management and the Audit Committee of the Board of Directors concluded that it was appropriate to restate the Company’s previously issued unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021, due to an ~~adverse opinion regarding our common shares, our share price and trading volume could decline.~~

~~The trading market~~error in accounting for ~~our common shares is influenced~~certain tax attributes related to an acquisition completed by the ~~research and reports~~Company in the third quarter of fiscal 2021. As part of such process, we identified a material weakness in our internal control over financial reporting, solely related to our accounting for the tax impact of acquisitions that ~~securities~~qualify as stock transactions for tax purposes.

A material weakness is a deficiency, or ~~industry analysts may publish about us, our business, our market or our competitors. If any~~a combination of ~~the analysts who may cover us adversely changes its recommendation regarding our common shares, or provides more favorable relative recommendations about our competitors, the trading price~~deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our ~~common shares~~annual or interim financial statements will not be prevented or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We expect to take steps to remediate the material weakness, but there is no assurance that any remediation efforts will ultimately have the intended effects.

If we identify any new material weaknesses in the future, any such newly identified material weakness could ~~decline. If any analyst who may cover us were~~limit our ability to ~~cease coverage~~prevent or detect a misstatement of our ~~Company~~accounts or ~~fail~~disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to ~~regularly publish~~maintain compliance with securities law requirements regarding timely filing of periodic reports ~~on us,~~in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we ~~could lose visibility~~have taken to date, or any measures we may take in the ~~financial markets, which in turn could cause the trading price~~future, will be sufficient to avoid potential future material weaknesses.

Table of ~~our common shares or trading volume to decline.~~Contents

ITEM 6 - EXHIBITS
Number

Description of Exhibits
(3)
3.1

Second Amended and Restated Articles of Incorporation of Inotiv, Inc. (formerly known as Bioanalytical Systems, Inc.) as amended through March 18, 2021 (incorporated by reference to the Company’s Form 8-K filed March 19, 2021)

3.2

Second Amended and Restated Bylaws of Inotiv, Inc. (formerly known as Bioanalytical Systems, Inc.) as amended through March 18, 2021 (incorporated by reference to the Company’s Form 8-K filed March 19, 2021)

(10)
10.1

Asset Purchase Agreement, dated April, 13, 2021, by and among Inotiv, Inc, Inotiv-Boulder HTL, LLC, HistoTox Labs, Inc. and the stockholder of HistoTox Labs, Inc. (incorporated by reference to the Company’s Form 8-K filed April 19, 2021)

10.2

Agreement and Plan of Merger, dated April 15, 2021, by and among Inotiv, Inc., Rock Mergeco, Inc., Inotiv Boulder, LLC, Bolder BioPATH, Inc. and the shareholders of Bolder BioPATH, Inc. (incorporated by reference to the Company’s Form 8-K filed April 19, 2021)

10.3

Amended and Restated Credit Agreement, dated April 30, 2021, between Inotiv, Inc. and First Internet Bank of Indiana (filed herewith)

10.4

First Amendment to Amended and Restated Credit Agreement, dated May 26, 2021, between Inotiv, Inc. and First Internet Bank of Indiana (filed herewith)

10.5

Consent and Waiver letter, dated May 5, 2021, from First Internet Bank of Indiana (filed herewith)

(31)
31.1

Certification of Principal Executive Officer (filed herewith).*

31.2

Certification of Chief Financial Officer (filed herewith).*

(32)
32.1

Written Statement of Principal 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

Inline XBRL data file (filed herewith)

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

*The certifications have been updated and no other changes were made.

Number Description of Exhibits
(3) 3.1 Second Amended and Restated Articles of Incorporation of Inotiv, Inc. (formerly known as Bioanalytical Systems, Inc.) as amended through March 18, 2021 (incorporated by reference to the Company’s Form 8-K filed March 19, 2021).

3.2 Second Amended and Restated Bylaws of Inotiv, Inc. (formerly known as Bioanalytical Systems, Inc.) as amended through March 18, 2021 (incorporated by reference to the Company’s Form 8-K filed March 19, 2021)

(10) 10.1 Offer letter from Inotiv, Inc. to John Gregory Beattie (filed herewith)

(31) 31.1 Certification of Principal Executive Officer (filed herewith).

31.2 Certification of Chief Financial Officer (filed herewith).

(32) 32.1 Written Statement of Principal 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)

2640

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:


Date: ~~May 14,~~December 21, 2021	INOTIV, INC.
	(Registrant)

	By:	/s/ Robert W. Leasure
	Robert W. Leasure
	President and Chief Executive Officer
	(Principal Executive Officer)



Date: ~~May 14,~~December 21, 2021	By:	/s/ Beth A. Taylor
	Beth A. Taylor
	Chief Financial Officer and Vice President of Finance (Principal Financial Officer and Accounting Officer)

2741


	June 30,		September 30,
	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	24,660	$	1,406
Accounts receivable
Trade, net of allowance of $513 at June 30, 2021 and $561 at September 30, 2020		15,487		8,681
Unbilled revenues and other		4,472		2,142
Inventories, net		977		700
Prepaid expenses		2,466		2,371
Total current assets		48,062		15,300

Property and equipment, net		44,678		28,729
Operating lease right-of-use assets, net		8,695		4,001
Finance lease right-of-use assets, net		66		4,778
Goodwill		50,617		4,368
Other intangible assets, net		24,336		4,261
Lease rent receivable		106		75
Other assets		180		81
Total assets	$	176,740	$	61,593

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	4,724	$	3,196
Restructuring liability		0		168
Accrued expenses		4,741		2,688
Customer advances		19,969		11,392
Capex line of credit		931		2,613
Current portion on long-term operating lease		1,916		866
Current portion of long-term finance lease		29		4,728
Current portion of long-term debt		14,752		5,991
Total current liabilities		47,062		31,642
Long-term operating leases, net		6,884		3,344
Long-term finance leases, net		39		44
Long-term debt, less current portion, net of debt issuance costs		28,700		18,826
Deferred tax liabilities, net		294		141
Total liabilities		82,979		53,997

Shareholders’ equity:
Preferred shares, authorized 1,000,000 shares, 0 par value:
NaN Series A shares at June 30, 2021 and 25 shares at September 30, 2020 issued and outstanding at $1,000 stated value		0		25
Common shares, 0 par value:
Authorized 19,000,000 shares; 15,866,655 issued and outstanding at June 30, 2021 and 10,977,675 at September 30, 2020		3,928		2,706
Additional paid-in capital		110,230		26,775
Accumulated deficit		(20,397)		(21,910)
Total shareholders’ equity		93,761		7,596
Total liabilities and shareholders’ equity	$	176,740	$	61,593

	March 31, 2021			September 30, 2020
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,186		$	1,406
Accounts receivable
Trade, net of allowance of $500 at March 31, 2021 and $561 at September 30, 2020		9,340			8,681
Unbilled revenues and other		3,338			2,142
Inventories, net		872			700
Prepaid expenses		2,135			2,371
Total current assets		17,871			15,300

Property and equipment, net		29,353			28,729
Operating lease right-of-use assets, net		4,105			4,001
Finance lease right-of-use assets, net		4,710			4,778
Goodwill		4,368			4,368
Other intangible assets, net		3,949			4,261
Lease rent receivable		129			75
Other assets		86			81

Total assets	$	64,571		$	61,593

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,967		$	3,196
Restructuring liability					168
Accrued expenses		2,932			2,688
Customer advances		15,186			11,392
Capex line of credit		—			2,613
Current portion on long-term operating lease		1,004			866
Current portion of long-term finance lease		4,664			4,728
Current portion of long-term debt		8,317			5,991
Total current liabilities		36,070			31,642
Long-term operating leases, net		3,278			3,344
Long-term finance leases, net		42			44
Long-term debt, less current portion, net of debt issuance costs		17,925			18,826
Deferred tax liabilities		180			141
Total liabilities		57,495			53,997

Shareholders’ equity:
Preferred shares, authorized 1,000,000 shares, no par value:
No Series A shares at March 31, 2021 and 25 shares at September 30, 2020 issued and outstanding at $1,000 stated value		—			25
Common shares, no par value:
Authorized 19,000,000 shares; 11,179,041 issued and outstanding at March 31, 2021 and 10,977,675 at September 30, 2020		2,756			2,706
Additional paid-in capital		27,319			26,775
Accumulated deficit		(22,999	)		(21,910	)
Total shareholders’ equity		7,076			7,596
Total liabilities and shareholders’ equity	$	64,571		$	61,593


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Service revenue	$	21,924	$	14,852	$	56,858	$	42,185
Product revenue		968		913		2,671		2,510
Total revenue		22,892		15,765		59,529		44,695

Cost of service revenue		14,701		10,113		38,204		29,119
Cost of product revenue		545		588		1,477		1,730
Total cost of revenue		15,246		10,701		39,681		30,849

Gross profit		7,646		5,064		19,848		13,846
Operating expenses:
Selling		950		692		2,343		2,672
Research and development		107		105		290		429
Start up costs		479		120		841		232
General and administrative		7,813		4,624		18,584		12,205
Total operating expenses		9,349		5,541		22,058		15,538

Operating loss		(1,703)		(477)		(2,210)		(1,692)

Interest expense		(449)		(382)		(1,163)		(1,085)
Other income		1		1		180		13
Net income (loss) before income taxes		(2,151)		(858)		(3,193)		(2,764)

Income tax expense (benefit)		(4,753)		21		(4,706)		129

Net income (loss)	$	2,602	$	(879)	$	1,513	$	(2,893)


Basic net income (loss) per share	$	0.18	$	(0.08)	$	0.12	$	(0.27)
Diluted net income (loss) per share	$	0.17	$	(0.08)	$	0.12	$	(0.27)

Weighted common shares outstanding:
Basic		14,656		10,910		12,274		10,807
Diluted		15,383		10,910		12,948		10,807

	Three Months Ended March 31,						Six Months Ended March 31,
	2021			2020			2021			2020
Service revenue	$	17,902		$	15,191		$	34,934		$	27,333
Product revenue		849			821			1,702			1,597
Total revenue		18,751			16,012			36,636			28,930

Cost of service revenue		11,949			10,207			23,502			19,118
Cost of product revenue		522			612			933			1,142
Total cost of revenue		12,471			10,819			24,435			20,260

Gross profit		6,280			5,193			12,201			8,670
Operating expenses:
Selling		1,175			1,447			2,138			2,665
Research and development		203			162			399			324
General and administrative		5,423			3,779			10,171			6,896
Total operating expenses		6,801			5,388			12,708			9,885

Operating loss		(521	)		(195	)		(507	)		(1,215	)

Interest expense		(366	)		(392	)		(713	)		(703	)
Other income		179			10			179			12
Net loss before income taxes		(708	)		(577	)		(1,041	)		(1,906	)

Income tax expense		15			11			48			108

Net loss	$	(723	)	$	(588	)	$	(1,089	)	$	(2,014	)

Basic net loss per share	$	(0.06	)	$	(0.05	)	$	(0.10	)	$	(0.19	)
Diluted net loss per share	$	(0.06	)	$	(0.05	)	$	(0.10	)	$	(0.19	)

Weighted common shares outstanding:
Basic		11,151			10,843			11,083			10,756
Diluted		11,151			10,843			11,083			10,756

	Six Month Period Ended March 31, 2021
											Additional					Total
	Preferred Shares						Common Shares				paid-in		Accumulated			shareholders’
	Number			Amount			Number		Amount		capital		deficit			equity
Balance at September 30, 2020		25		$	25			10,977,675	$	2,706	$	26,775	$	(21,910	)	$	7,596
Net loss														(366	)		(366	)
Stock option exercises								23,350		6		39					45
Stock based compensation								116,974		29		152					181

Balance at December 31, 2020		25		$	25			11,117,999	$	2,741	$	26,966	$	(22,276	)	$	7,456
Net loss														(723	)		(723	)
Stock based compensation								12,502		3		275					278
Stock option exercises								36,040		9		56					65
Preferred stock conversion		(25	)		(25	)		12,500		3		22
Balance March 31, 2021		0		$	0			11,179,041	$	2,756	$	27,319		(22,999	)	$	7,076


	Nine Month Period Ended June 30, 2021
							Additional				Total
	Preferred Shares			Common Shares			paid-in		Accumulated		shareholders’
	Number	Amount		Number	Amount		capital		deficit		equity
Balance at September 30, 2020	25	$	25	10,977,675	$	2,706	$	26,775	$	(21,910)	$	7,596
Net loss	0		0	0		0		0		(366)		(366)
Stock option exercises	0		0	23,350		6		39		0		45
Stock based compensation	0		0	116,974		29		152		0		181
Balance at December 31, 2020	25	$	25	11,117,999	$	2,741	$	26,966	$	(22,276)	$	7,456

Net loss	0		0	0		0		0		(723)		(723)
Stock based compensation	0		0	12,502		3		275		0		278
Stock option exercises	0		0	36,040		9		56		0		65
Preferred stock conversion	(25)		(25)	12,500		3		22		0		0
Balance March 31, 2021	0	$	0	11,179,041	$	2,756	$	27,319		(22,999)	$	7,076

Net income	0		0	0		0		0		2,602		2,602
Stock based compensation	0		0	15,352		4		577		0		581
Stock option exercises	0		0	39,910		10		68		0		78
Stock issued in acquisition	0		0	1,588,235		397		34,055		0		34,452
Equity raise	0		0	3,044,117		761		48,211		0		48,972
Balance at June 30, 2021	0	$	0	15,866,655	$	3,928	$	110,230		(20,397)	$	93,761

	Six Month Period Ended March 31, 2020
									Additional					Total
	Preferred Shares				Common Shares				paid-in		Accumulated			shareholders’
	Number		Amount		Number		Amount		capital		deficit			equity
Balance at September 30, 2019		35	$	35		10,510,694	$	2,589	$	25,183	$	(17,097	)	$	10,710
Adoption of accounting standard												(128	)		(128	)
Net loss												(1,426	)		(1,426	)
Stock issued in acquisition						240,000		60		1,073					1,133
Stock based compensation						54,363		14		67					81

Balance at December 31, 2019		35	$	35		10,805,057	$	2,663	$	26,323	$	(18,651	)	$	10,370
Net loss												(588	)		(588	)
Stock based compensation						26,521		7		116					123
Stock option exercises						32,703		8		12					20
Balance March 31, 2020		35	$	35		10,864,281	$	2,678	$	26,451		(19,239	)	$	9,925


	Nine Month Period Ended June 30, 2020
							Additional				Total
	Preferred Shares			Common Shares			paid-in		Accumulated		shareholders’
	Number	Amount		Number	Amount		capital		deficit		equity
Balance at September 30, 2019	35	$	35	10,510,694	$	2,589	$	25,183	$	(17,097)	$	10,710

Adoption of accounting standard	0		0	0		0		0		(128)		(128)

Net loss	0		0	0		0		0		(1,426)		(1,426)
Stock issued in acquisition	—		—	240,000		60		1,073		0		1,133
Stock based compensation	0		0	54,363		14		67		0		81
Balance at December 31, 2019	35	$	35	10,805,057	$	2,663	$	26,323	$	(18,651)	$	10,370

Net loss	—		—	0		0		0		(588)		(588)
Stock based compensation	—		—	26,521		7		116		0		123
Stock option exercises	—		—	32,703		8		12		0		20
Balance at March 31, 2020	35	$	35	10,864,281	$	2,678	$	26,451	$	(19,239)	$	9,925

Net loss	—		—	0		0		0		(879)		(879)
Preferred stock conversion	—		(10)	5,000		1		9		0		0
Stock based compensation	—		—	40,000		11		166		0		176
Stock option exercises	—		—	54,394		13		(8)		0		5
Balance at June 30, 2020	35	$	25	10,963,675	$	2,703	$	26,617	$	(20,118)	$	9,227



	As of June 30, 2021 (unaudited)
	As Previously Reported		Restated Adjustment		As Restated
Balance Sheet
Total current assets	$	48,062	$	—	$	48,062
Property and equipment, net		44,678		—		44,678
Goodwill		45,750		4,867		50,617
Other noncurrent assets		33,383		—		33,383
Total Assets	$	171,873	$	4,867	$	176,740

Liabilities and shareholders' equity
Total liabilities	$	82,979	$	—	$	82,979
Common shares, 0 par value		3,928		—		3,928
Additional paid-in-capital		110,230		—		110,230
Accumulated deficit	$	(25,264)	$	4,867	$	(20,397)
Total Liabilities and shareholders' equity	$	171,873	$	4,867	$	176,740


	Three Months Ended June 30, 2021 (unaudited)
	As Previously Reported		Restated Adjustment		As Restated
Total revenue	$	22,892	$	—	$	22,892
Total cost of revenue		15,246		—		15,246
Gross profit		7,646		—		7,646
Total operating expenses		9,349		—		9,349
Operating income (loss)		(1,703)		—		(1,703)
Interest expense		(449)		—		(449)
Other income (expense)		1		—		1
Income tax expense (benefit)		114		(4,867)		(4,753)
Net income (loss)	$	(2,265)	$	4,867	$	2,602

Basic net income (loss) per share	$	(0.15)			$	0.18
Diluted net income (loss) per share	$	(0.15)			$	0.17

Basic weighted average shares outstanding		14,656		—		14,656
Diluted weighted average shares outstanding		14,656		727		15,383


	Nine Months Ended June 30, 2021 (unaudited)
	As Previously Reported		Restated Adjustment		As Restated
Total revenue	$	59,529	$	—	$	59,529
Total cost of revenue		39,681		—		39,681
Gross profit		19,848		—		19,848
Total operating expenses		22,058		—		22,058
Operating income (loss)		(2,210)		—		(2,210)
Interest expense		(1,163)		—		(1,163)
Other income (expense)		180		—		180
Income tax expense (benefit)		161		(4,867)		(4,706)
Net income (loss)	$	(3,354)	$	4,867	$	1,513

Basic net income (loss) per share	$	(0.27)			$	0.12
Diluted net income (loss) per share	$	(0.27)			$	0.12

Basic weighted average shares outstanding		12,274		—		12,274
Diluted weighted average shares outstanding		12,274		674		12,948

	Options (shares)			Weighted- Average Exercise Price
Outstanding – October 1, 2020		712		$	2.21


							Weighted-
							Average
						Options	Exercise
						(shares)	Price
Outstanding - October 1, 2020						712	$	2.21
Granted		43		$	10.12	295	$	21.72
Exercised		(60	)	$	1.86	(99)	$	1.89
Forfeited		(22	)	$	3.99	(34)	$	3.88
Expired		(2	)	$	2.02	(5)	$	2.03
Outstanding – March 31, 2021		671		$	2.69

Exercisable at March 31, 2021		392		$	1.82
Outstanding - June 30, 2021						869	$	8.82

Exercisable at June 30, 2021						387	$	1.93


Risk-free interest rate	0.93	~~0.40~~	%
Dividend yield	0	~~0.00~~	%
Volatility of the expected market price of the Company’s common shares	70.48	~~76.56~~	%
Expected life of the options (years)	5.95	~~5.95~~

	Restricted Shares			Weighted- Average Grant Date Fair Value

							Weighted-
							Average
						Restricted	Grant Date
						Shares	Fair Value
Outstanding – September 30, 2020		128		$	3.88	128	$	3.88
Granted		132		$	8.74	150		10.50
Vested		(10	)	$	1.28	(10)		1.28
Forfeited		(2	)		6.63	(5)		6.63
Outstanding – March 31, 2021		248		$	6.54
Outstanding – June 30, 2021						263	$	7.70

	Three Months Ended March 31,						Six Months Ended March 31,
	2021			2020			2021			2020
Basic net loss per share:
Net loss applicable to common shareholders	$	(723	)	$	(588	)	$	(1,089	)	$	(2,014	)
Weighted average common shares outstanding		11,151			10,843			11,083			10,756
Basic net loss per share	$	(0.06	)	$	(0.05	)	$	(0.10	)	$	(0.19	)


	Principal Amount
	as of date of Credit				Monthly
	Agreement		Annual		Payment
	April 30, 2021		Interest		Amount
Loan Name	(000)		Rate		(000)		Maturity Date	Use of Proceeds
Term Loan 1	$	3,980	5.20	%	$	36	March 28, 2025	Funded expansion of building on real property in Mount Vernon, IN
Term Loan 2	$	3,571	5.06	%	$	78	July 2, 2023	Funded a portion of the cash consideration for the Seventh Wave Laboratories acquisition
Term Loan 3	$	1,076	5.20	%	$	32	March 28, 2025	Funded equipment needs associated with expansion of real property in Mount Vernon, IN
Term Loan 4	$	1,001	4.63	%	$	20	November 1, 2025	Funded the cash consideration for the Smithers Avanza acquisition
Term Loan 5	$	810	4.00	%	$	17	June 30, 2025	Funded certain capital expenditures
Term Loan 6	$	2,865	4.25	%	$	56	December 31, 2025	Funded certain capital expenditures
Term Loan 7	$	1,263	4.00	%	$	28	June 1, 2025	Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 8	$	1,853	4.00	%	$	12	December 1, 2024	Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 9	$	10,000	3.85	%	$	184 ^(a)	April 30, 2026	Funded a portion of the cash consideration of the Bolder BioPATH merger
Term Loan 10	$	5,000	3.85	%	$	92 ^(a)	April 30, 2026	Funded a portion of the cash consideration of the HistoTox Labs acquisition
Term Loan 11	$	3,622	3.99	%	$	33	June 23, 2022	Refinanced debt with The Huntington Bank for general business purposes
Term Loan 12	$	4,832 ^(b)	3.85	%	$	10 ^(c)	December 26, 2026	Financed the acquisition of the St. Louis facility and associated expansion


	As of:
	June 30, 2021		September 30, 2020
Term Loan #1	$	3,943	$	4,230
Term Loan #2		3,446		4,004
Term Loan #3		1,031		1,266
Term Loan #4		969		1,115
Term Loan #5		781		920
Term Loan #6		2,728		0
Term Loan #7		1,216		1,425
Term Loan #8		1,842		1,891
Term Loan #9		9,850		0
Term Loan #10		4,925		0
Term Loan #11		3,559		3,748
Term Loan #12		2,088		0
Subtotal Term Loans		36,378		18,599
Seller Note – Bolder BioPath		1,500		0
Seller Note – Smithers Avanza		385		650
Seller Note – Preclinical Research Services		702		752
Paycheck protection program loan		5,051		5,051
		44,016		25,052
Less: Current portion		(14,752)		(5,991)
Less: Debt issue costs not amortized		(564)		(235)
Total Long-term debt	$	28,700	$	18,826

	As of:
	March 31, 2021			September 30, 2020
Initial Term Loan	$	3,622		$	3,748
Second Term Loan		3,634			4,004
Third Term Loan		1,018			1,115
Fourth Term Loan		1,286			1,425
Fifth Term Loan		1,858			1,891
Initial Capex Line		826			920
Second Capex Line		2,865			—
Subtotal Term Loans		15,109			13,103
Construction and Equipment loans		5,119			5,496
Seller Note – Smithers Avanza		480			650
Seller Note – Preclinical Research Services		719			752
Paycheck protection program loan		5,051			5,051
		26,478			25,052
Less: Current portion		(8,317	)		(5,991	)
Less: Debt issue costs not amortized		(235	)		(235	)
Total Long-term debt	$	17,925		$	18,826


	Allocation as of
	June 30, 2021
Assets acquired and liabilities assumed:
Receivables	$	578
Property and equipment		2,836
Unbilled receivables		162
Prepaid expenses		27
Intangible assets		2,081
Goodwill		751
Accounts payable		(109)
Accrued expenses		(118)
Customer advances		(351)
	$	5,857

	Allocation as of March 31, 2021
Assets acquired and liabilities assumed:
Receivables	$	578
Property and equipment		2,836
Unbilled receivables		162
Prepaid expenses		27
Intangible assets		2,081
Goodwill		751
Accounts payable		(109	)
Accrued expenses		(118	)
Customer advances		(351	)
	$	5,857


	Preliminary
	Allocation as of
	June 30, 2021
Assets acquired and liabilities assumed:
Receivables		1,020
Prepaid expenses		40
Operating lease ROU		2,239
Property and equipment		4,021
Intangible assets		8,500
Other Assets		35
Goodwill		9,386
Accounts payable		(128)
Customer advances		(553)
Operating lease liability		(2,239)
	$	22,321

	Six Months Ended
	March 31, 2020
Total revenues	$	29,847

Net loss		(1,887	)

Pro forma basic net loss per share	$	(0.17	)
Pro forma diluted net loss per share	$	(0.17	)

	Balance at September 30, 2020		Additions		Deductions			Balance at March 31, 2021

										Balance at						Balance at
										September 30,						June 30,
										2020		Additions		Deductions		2021
Contract Assets: Unbilled receivables	$	1,879	$	1,371	$	(857	)	$	2,393	$	1,879	$	3,963	$	(1,848)	$	3,994
Contract liabilities: Customer advances	$	11,392	$	77,700	$	(73,906	)	$	15,186	$	11,392	$	125,225	$	(116,648)	$	19,969


	As of		As of
	June 30, 2021		September 30, 2020
Operating right-of-use assets, net	$	8,695	$	4,001

Current portion of operating lease liabilities		1,916		866
Long-term operating lease liabilities		6,884		3,344
Total operating lease liabilities	$	8,800	$	4,210

Finance right-of-use assets, net	$	66	$	4,778

Current portion of finance lease liabilities		29		4,728
Long-term finance lease liabilities		39		44
Total finance lease liabilities	$	68	$	4,772

	As of		As of
	March 31, 2021		September 30, 2020
Operating right-of-use assets, net	$	4,105	$	4,001

Current portion of operating lease liabilities		1,004		866
Long-term operating lease liabilities		3,278		3,344
Total operating lease liabilities	$	4,282	$	4,210

Finance right-of-use assets, net	$	4,710	$	4,778

Current portion of finance lease liabilities		4,664		4,728
Long-term finance lease liabilities		42		44
Total finance lease liabilities	$	4,706	$	4,772

	Three months ended			Six months ended
	March 31, 2021			March 31, 2021

							Three months ended		Nine months ended
							June 30, 2021		June 30, 2021
Operating lease costs:
Fixed operating lease costs	$	242		$	474		$	292	$	736
Short-term lease costs		42			52			32		66
Lease income		(159	)		(318	)		(159)		(477)
Finance lease costs:
Amortization of right-of-use asset expense		35			72			25		97
Interest on finance lease liability		68			137			46		183
Total lease cost	$	228		$	417		$	236	$	605

	~~As of~~
	~~March 31, 2021~~ As of
	June 30, 2021
Weighted-average remaining lease term (in years)
Operating lease	4.91	~~4.49~~
Finance lease	3.43	~~0.37~~

Weighted-average discount rate (in percentages)
Operating lease	4.46	~~5.24~~	%
Finance lease	4.86	~~5.82~~	%


	Operating Leases		Finance Leases
2021 (remainder of fiscal year)	$	496	$	6
2022		2,001		24
2023		2,022		18
2024		1,998		18
2025		1,494		7
Thereafter		1,800		1
Total minimum future lease payments		9,811		74
Less interest		(1,011)		(6)
Total lease liability		8,800		68

	Operating Leases			Finance Leases
2021 (remainder of fiscal year)	$	522		$	4,777
2022		1,069			22
2023		1,113			16
2024		1,231			16
2025		393			5
Thereafter		494			-
Total minimum future lease payments		4,822			4,836
Less interest		(540	)		(130	)
Total lease liability		4,282			4,706

Loan Name	Principal Amount as of date of Credit Agreement	Annual Interest Rate			Monthly Payment Amount (000)			Maturity Date	Use of Proceeds
Term Loan 1	$3.980 million		5.20	%	$	36		March 28, 2025	Funded expansion of building on real property in Mount Vernon, IN
Term Loan 2	$3.571 million		5.06	%	$	78		July 2, 2023	Funded a portion of the cash consideration for the Seventh Wave Laboratories acquisition
Term Loan 3	$1.076 million		5.20	%	$	32		March 28, 2025	Funded equipment needs associated with expansion of real property in Mount Vernon, IN
Term Loan 4	$1.001 million		4.63	%	$	20		November 1, 2025	Funded the cash consideration for the Smithers Avanza acquisition
Term Loan 5	$810 thousand		4.00	%	$	17		June 30, 2025	Funded certain capital expenditures
Term Loan 6	$2.865 million		4.25	%	$	56		December 31, 2025	Funded certain capital expenditures
Term Loan 7	$1.263 million		4.00	%	$	28		June 1, 2025	Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 8	$1.853 million		4.00	%	$	12		December 1, 2024	Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 9	$10.000 million		3.85	%	$	184	*	April 30, 2026	Funded a portion of the cash consideration of the Merger
Term Loan 10	$5.000 million		3.85	%	$	92	*	April 30, 2026	Funded a portion of the cash consideration of the HistoTox Labs Acquisition
Term Loan 11	$3.622 million		3.99	%	$	33		June 23, 2022	Refinanced debt with The Huntington Bank for general business purposes